How Planning has helped in building an robust base for Indian Economy?

Influenced by the Soviet Union India adopted 5 year plans to give a direction for the economy and realise the goals of modern India. These plans made a significant contribution towards empowering India.

Planning in India:

  • India’s planned approach led to the setting up of public sector units (PSUs) in diverse areas of manufacturing; research institutions in cutting-edge technologies of the time such as space and atomic energy; and centers of higher learning, including the Indian Institutes of Technologies (IITs). This benefited India immensely in capacity building.
  • British had left the Indian economy in a shattered condition. If not for the planning approach, India could not have achieved these.
  • It was through the planning India was able to counter the traditional economic theory which advocated that a labor-surplus country like India should be limiting its industrial development ambitions to labour-intensive sectors, such as garments or leather.
  • Through five year plans India was able to give impetus to heavy engineering and machine-making industry, scientific research institutes, and electric power
  • The programmes launched under the ambit of five-year plans helped India in building indigenous capabilities in the capital and technology-intensive sectors. Despite the general poverty, India became a model for other developing and Third World nations.
  • Indian planning provided a fertile launching pad for the evolution of development economics as an important sub-discipline.
  • Five-year plans laid the foundation for India’s diversified economic base.
  • The successes for India in the information technology and knowledge-intensive sectors owe much to the research and educational institutions that were built during the early decades.

The planning in India largely ignored removing the hurdles of agriculture and small-scale industries. As a result, the benefits from state-led development have so far reached only a minority of Indians. It was flawed planning not planning in itself which led to the handicap of Indian Economy.

Originally written on August 18, 2023 and last modified on October 27, 2024.

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