Planning and the Planning Commission

Despite all their differences, almost everyone in India agreed on one thing: development could not be left to private businessmen alone. The government had to plan it.

Planning was popular worldwide at the time:

• the Great Depression of the 1930s had shown that free markets could fail badly;
• rebuilding Europe after the Second World War needed government direction;
• the Soviet Union had grown fast through planning.

Surprisingly, even India's big industrialists supported planning. In 1944, a group of them drafted the Bombay Plan, proposing a planned economy in which the state would make major investments in industry and other big projects. They knew private capital in India was too small to build steel plants, dams and railways on its own.

So after independence, planning was accepted by left and right alike.

The Planning Commission was set up in March 1950 by a simple resolution of the government. It was not created by the Constitution, and it had an advisory role: it recommended plans; the government and Parliament decided. The Prime Minister was its chairperson, which gave it great influence.

The Planning Commission ran for over six decades. On 1 January 2015, it was replaced by a new body, the NITI Aayog (National Institution for Transforming India), which acts more as a think tank working with the states.