Economic Planning: Planning Commission, plans and NDC

The National Development Council (set up on 6 August 1952 by an executive resolution) brought together the Prime Minister, Union Cabinet ministers, Chief Ministers and Planning Commission members. Its approval gave a Plan national acceptance across the Centre and the States; the approved Plan was then laid before Parliament. For example, the NDC approved the Twelfth Plan on 27 December 2012. The Finance Commission deals with tax devolution and grants, not with approving Plans.

India had two main channels of Centre-to-State transfers before 2015. The Finance Commission recommended tax devolution and grants under Articles 270, 275 and 280. Plan assistance was decided by the Planning Commission, using the Gadgil (later Gadgil– Mukherjee) formula approved by the National Development Council, and was given largely as grants under Article 282. The RBI only manages State borrowing and cash, and the Inter-State Council is a consultative forum.

Statements 1 and 2 are correct. The Fourth Plan started in April 1969 with the twin aims of growth with stability and progressive achievement of self-reliance; it also sought to reduce the concentration of economic power. In July 1969, in the Plan's first year, fourteen major banks were nationalised. Statement 3 is wrong: the Minimum Needs Programme came in the first year of the Fifth Plan (1974-75).

Statements 1 and 2 are correct. NITI Aayog, set up on 1 January 2015 by a Cabinet resolution to replace the Planning Commission, is a policy think tank: unlike its predecessor it has no power to allocate funds. Its founding resolution asks it to foster cooperative federalism and to develop mechanisms for credible plans at the village level, aggregated progressively upward. Statement 3 is wrong: no Five-Year Plan has been made after the Twelfth (2012-17), and the NDC has had no role since; the States now meet in NITI Aayog's Governing Council.

Statements 1 and 2 are correct. Indicative planning (French model after 1947) fixes broad targets and steers the private sector through incentives, credit, information and public investment; the market still decides most outcomes. Imperative planning of the Soviet type (Gosplan) issues binding targets to enterprises. Statement 3 is wrong: India's early Plans gave the public sector the commanding heights and used licensing and controls; the shift to indicative planning came with the Eighth Plan (1992-97) after the 1991 reforms.

All three statements are correct. With the Twelfth Plan ending in March 2017, NITI Aayog proposed a layered framework of a fifteen-year vision, a seven-year strategy and a three-year action agenda. The action agenda for 2017-18 to 2019-20 was released in August 2017. In December 2018 NITI Aayog released 'Strategy for New India @75', covering 41 areas with goals for 2022-23, the 75th year of Independence. (A separate fifteen-year vision document was not formally published.)

All three statements are correct. The Twelfth Plan (2012-17) was the last Five-Year Plan; after the Planning Commission was replaced by NITI Aayog in 2015, no Thirteenth Plan was made. Its Approach Paper (2011) proposed 9 per cent growth, but the slowdown led to a lower target of 8 per cent in the final document, which the NDC approved on 27 December 2012.

Statements 1 and 2 are correct. A committee under Pranab Mukherjee, then Deputy Chairman of the Planning Commission, revised the formula, and the NDC adopted it in December 1991 for use from the Eighth Plan. After setting aside funds for externally aided projects and special area programmes, 30 per cent of central assistance went to the Special Category States. Statement 3 is wrong: among the other States, population carried 60 per cent, per capita income 25 per cent (20 by the deviation method and 5 by the distance method), performance 7.5 per cent and special problems 7.5 per cent.