Functions of Planning Commission
The Planning Commission of India was a key institutional mechanism established by the Government of India in March 1950 to formulate, implement, and oversee the country’s development planning process. It functioned as an advisory and policy-making body that played a pivotal role in steering India’s economic and social development through its Five-Year Plans and other strategic initiatives. The Commission was dissolved in 2014, being replaced by the NITI Aayog (National Institution for Transforming India), but its contributions and functions remain historically significant in the evolution of India’s economic policy framework.
Historical Context and Objectives
The establishment of the Planning Commission was rooted in India’s post-independence aspiration for rapid economic growth, self-reliance, and social justice. Inspired by socialist and welfare-oriented principles, the government sought a centralised body to coordinate national development efforts through planned resource allocation.
The Planning Commission was created by a resolution of the Government of India rather than through an Act of Parliament. Its mandate was to assess national resources, define priorities, and prepare integrated development plans to achieve balanced growth and equitable distribution of wealth.
The first Five-Year Plan (1951–1956) focused on agricultural development and industrial expansion, marking the beginning of India’s planned economic journey under the Commission’s guidance.
Composition and Structure
The Planning Commission was headed by the Prime Minister of India, who acted as its Chairperson. Other members included:
- A Deputy Chairperson, usually a distinguished economist or policymaker.
- Several full-time members with expertise in various sectors.
- Ex-officio members, typically Union Ministers responsible for key portfolios.
- A Member-Secretary, responsible for administrative coordination.
The Commission operated through specialised divisions, such as Agriculture, Industry, Energy, Education, Health, Rural Development, and Transport, enabling sector-wise analysis and policy formulation.
Core Functions of the Planning Commission
The Planning Commission performed a wide range of strategic, analytical, and advisory functions essential to India’s planned development model. Its major functions are outlined below:
1. Assessment of National Resources
One of the Commission’s primary functions was to evaluate the available material, capital, and human resources of the country. It assessed:
- Natural resources such as minerals, water, and energy.
- Financial resources including savings, investments, and foreign aid.
- Human resources in terms of population, skills, and employment potential.
This assessment helped identify gaps between available resources and developmental requirements.
2. Formulation of Five-Year and Annual Plans
The Commission was responsible for preparing Five-Year Plans that set out the nation’s medium-term development strategy. These plans outlined:
- Growth targets for various sectors such as agriculture, industry, and infrastructure.
- Investment priorities and expenditure programmes.
- Policy directions for economic, social, and regional development.
Additionally, Annual Plans were prepared to bridge periods between successive Five-Year Plans or to address emerging priorities.
3. Determination of Plan Priorities
The Planning Commission determined the priorities of development based on national needs, resource constraints, and socio-economic objectives. It balanced competing demands from sectors such as defence, industry, and agriculture, ensuring optimal utilisation of resources for maximum national benefit.
4. Allocation of Resources to States
A key function of the Commission was to allocate plan funds to Central Ministries and State Governments. It recommended:
- Financial assistance for state-level development programmes.
- Allocation based on objective criteria such as population, poverty, and development index.
- Incentives for performance, efficiency, and regional balance.
This function made the Commission instrumental in shaping Centre–State fiscal relations in India.
5. Coordination among Ministries and States
The Commission acted as a coordinating body to resolve conflicts and ensure consistency between policies of different ministries and state governments. It facilitated inter-sectoral and inter-state coordination to avoid duplication of efforts and to promote integrated development.
6. Policy Advisory Role
The Planning Commission provided policy advice to the Central and State Governments on various issues concerning:
- Economic growth and stability.
- Industrial and agricultural strategies.
- Labour and employment policies.
- Poverty alleviation and social welfare programmes.
Its recommendations often influenced national economic reforms and legislative decisions.
7. Monitoring and Evaluation of Plans
The Commission monitored the implementation of plan schemes and evaluated their effectiveness. It reviewed progress through:
- Periodic performance reports from ministries and states.
- On-site inspections and data analysis.
- Identification of bottlenecks and corrective measures.
This function ensured accountability and facilitated the revision of policies in line with changing conditions.
8. Promotion of Balanced Regional Development
Recognising regional disparities as a major developmental challenge, the Commission prioritised balanced regional growth. It encouraged special programmes for:
- Backward and drought-prone areas.
- Hill and tribal regions.
- Infrastructure-deficient districts.
Initiatives such as the Hill Area Development Programme and Backward Regions Grant Fund emerged from this emphasis.
9. Encouragement of Public Sector Development
The Planning Commission played a crucial role in expanding India’s public sector. It formulated investment policies for large-scale industries, infrastructure, and energy projects. Public sector undertakings (PSUs) were seen as engines of economic growth and social welfare, aligned with the state-led development model.
10. Promotion of Research and Data Analysis
For evidence-based planning, the Commission promoted economic research, statistical analysis, and modelling. It worked closely with institutions like the Central Statistical Organisation (CSO), National Sample Survey Organisation (NSSO), and Indian Statistical Institute (ISI) to generate reliable data for policy formulation.
11. Mobilisation of Public and Private Investment
The Commission sought to mobilise both public and private resources to meet developmental targets. It framed investment strategies and created policy environments conducive to industrialisation and capital formation. It also guided the use of foreign aid and external assistance for national projects.
12. Formulation of Employment and Poverty Alleviation Programmes
Addressing unemployment and poverty was a central function of the Commission. It designed and supervised major national programmes such as:
- Integrated Rural Development Programme (IRDP)
- Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)
- Jawahar Rozgar Yojana
- Twenty Point Programme
These initiatives aimed to ensure inclusive growth and social justice.
13. Promotion of Scientific and Technological Development
The Commission integrated science and technology into the planning process by allocating funds for research institutions, innovation, and technological upgradation. It encouraged self-reliance in critical sectors like defence, space research, and nuclear energy.
Role in Economic Policy and Development
Throughout its existence, the Planning Commission served as India’s central policy think-tank, guiding the nation’s transition from an agrarian economy to a mixed industrial economy. It played a defining role in:
- Shaping industrial licensing policies.
- Framing the Green Revolution strategy.
- Expanding rural development programmes.
- Encouraging infrastructure and energy development.
The Commission also helped India adapt to changing global dynamics, especially during the economic liberalisation phase of the 1990s, when it supported structural reforms while continuing to focus on inclusive growth.
Criticism of the Planning Commission
Despite its achievements, the Planning Commission faced criticism for several reasons:
- Centralised control: Excessive concentration of decision-making at the Centre limited the autonomy of states.
- Bureaucratic inefficiency: Its functioning was often criticised as slow, rigid, and non-transparent.
- Outdated approach: The centrally planned model was seen as incompatible with a liberalised, market-driven economy.
- Lack of accountability: The Commission’s recommendations were advisory, not binding, leading to uneven implementation.
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