B. Planning and its Impact

There was consensus on one point that the government should plan for development, not the private sector. In fact the idea of planning as a process of rebuilding economy earned a good deal of public support in the 1940's and 1950's all over in the world. The experience of great depression in Europe, the inter-war reconstruction of Japan and Germany, most of all spectacular economic growth against heavy odds in the Soviet Union in the 1930s and 1940s contributed to this consensus.

Generally, it is assumed that the big business entrepreneurs are averse to the idea of planning. Contrary to this, a section of big industrialists came together in 1944 and drafted a joint proposal for setting up a planned economy in the country. It was called the Bombay Plan.

After the Independence, the Planning Commission was set up in March 1950 by a simple resolution of the Government of India. It has an advisory role and its recommendation become effective only when the Union cabinet approves these. The scope of the resolution by which Planning Commission was formed:

1. Every individual should have the right to an adequate means of livelihood.

2. Material resources of community their ownership and control should served the common good.

3. Economic system should operate in such a way that use of ‘means of production’ and ‘wealth’ should not result in well being of particular community and to the detriment of the society.

As in the then U.S.S.R [United Soviet Socialist Republic], the Planning Commission of India opted for five year plans. It was argued that five years plans had the advantage of permitting the government to focus on the larger picture and make long term intervention in the economy. This entailed preparing a detailed plan for all income and expenditure for the next 5 years. Accordingly the budget of the central and all the state governments was divided into two parts:

♤ Non 'Planned' Budget – This is spent on routine items on a yearly basis.

♤ Planned Budget – This is spent on a Five year basis as per the priorities fixed by the plan.