Planning, Liberalisation and Economic Development in India
Planning, Liberalisation and Economic Development in India
The exam tests the logic of planning, the 1991 reforms and the outcomes. You need to explain institutions, objectives and trade-offs.
Core rules and concepts
- The Planning Commission was set up in 1950 as an executive body, not a constitutional one; NITI Aayog replaced it in 2015.
- The First Five-Year Plan (1951-56) prioritised agriculture; the Second (1956-61) followed the Mahalanobis model and prioritised heavy industry, import substitution and the public sector. Licensing and the licence raj shaped private investment.
- The Green Revolution raised wheat output in the 1960s; Operation Flood supported milk production; the PDS and poverty programmes addressed food security.
- The 1991 crisis involved low foreign-exchange reserves, the Gulf War shock and fiscal strain. India took an IMF loan and adopted LPG reforms: liberalisation, privatisation and globalisation; the rupee was devalued, licensing was reduced, and FDI was opened.
- Outcomes include higher growth, services and IT, and poverty reduction, but also inequality, agricultural distress, human-development gaps and environmental stress. GST came in 2017; NITI Aayog signals a shift from central planning to cooperative federalism.
Worked example
Was 1991 a break or continuity? Reasoning: it was a break in instruments - licensing was dismantled and external opening expanded. It was continuity in the state's role in strategic sectors, subsidies, welfare and public investment. A good answer compares policy tools, not slogans.
Traps
Calling the Planning Commission constitutional; saying the First Plan prioritised heavy industry; claiming 1991 ended the public sector; equating liberalisation with no state.