Chapter 3 — Politics of Planned Development

The chapter examines the political choices and debates involved in India's economic development after Independence. It traces the key question of who should drive development, how Five Year Plans were adopted, and why different groups — industrialists, farmers, Adivasi communities — contested what 'development' meant for them.

The Planning Commission was set up in March 1950 by a simple resolution of the Government of India — it was not created by the Constitution. It had an advisory role, and its recommendations became effective only when the Union Cabinet approved them. The Prime Minister served as its Chairperson, and it became the most influential body deciding India's development strategy.

The Bombay Plan was a joint proposal drafted in 1944 by a section of leading industrialists for setting up a planned economy in India. It called on the state to take major initiatives in industrial and other economic investments. Its significance is that even private business leaders — not just socialists — supported planned development before Independence.

The First Five Year Plan sought to get the country's economy out of the cycle of poverty. It focused mainly on the agrarian sector, including investment in dams and irrigation, because agriculture was hit hardest by Partition. Huge allocations were made for large-scale projects like the Bhakhra Nangal Dam, and land reforms were identified as key to agricultural growth. Economist K.N. Raj, who helped draft the plan, argued India should 'hasten slowly' to protect democracy.

While the First Plan focused on agriculture and urged patience, the Second Five Year Plan stressed rapid industrialisation and heavy industries. It was drafted under the leadership of P.C. Mahalanobis and aimed for quick structural transformation in all directions simultaneously. It also reflected the Congress party's Avadi declaration of a 'socialist pattern of society' and imposed substantial tariffs on imports to protect domestic industries.

P.C. Mahalanobis (1893–1972) was a scientist and statistician of international repute. He was the founder of the Indian Statistical Institute (1931) and served as the architect of India's Second Five Year Plan. He was a strong supporter of rapid industrialisation and an active role for the public sector in India's economic development.

At its session held at Avadi near the then Madras city, the Congress party passed an important resolution declaring that 'socialist pattern of society' was its goal. This was directly reflected in the Second Five Year Plan, which emphasised state ownership, public sector expansion, and protection of domestic industries through import tariffs.

The chapter explains that in the politics of most countries, 'Left' refers to those who favour state control of the economy and prefer state regulation over free competition. The 'Right' refers to those who believe that free competition and market economy alone ensure progress and that the government should not unnecessarily intervene in the economy.

The 'plan holiday' refers to a period when the government suspended Five Year Planning. The Fourth Plan was due to start in 1966, but by then the novelty of planning had declined considerably and India was facing an acute economic crisis. The government therefore decided to take a plan holiday rather than launch the Fourth Plan on schedule.

On the eve of Independence, India had two main models before it: the liberal-capitalist model as practised in much of Europe and the US, and the socialist model as in the USSR. Many Indian leaders — including those in the Socialist Party and Nehru within the Congress — were deeply impressed by the Soviet model, while there were very few supporters of American-style capitalist development.

The Government of India replaced the Planning Commission with NITI Aayog (National Institution for Transforming India), which came into existence on 1 January 2015.

Yes. The NCERT PDF for 'Politics of Planned Development' (Class 12 Political Science, Politics in India since Independence, Chapter 3) is available free of charge on cbseprepmaster.com. No sign-up or account is required to download it.