Planning

The Consensus on Planning

Despite sharp disagreements over the specific model of development, there was one point on which almost everyone agreed after independence: development could not be left entirely to private actors. The government had to step in and create a deliberate, coordinated design — a plan — for the country's economic transformation. This was not a fringe idea; it was the mainstream view across the political spectrum.

The Planning Commission: A Constitutional Puzzle

You might search the Constitution of India for any mention of a "Planning Commission" — and you will find none. That is because the Planning Commission was not a constitutional body. It was set up in March 1950 by a simple resolution of the Government of India. Its role was purely advisory: its recommendations became effective only after the Union Cabinet approved them.

The resolution that created the Commission defined its scope by linking it directly to the Constitution's goals. It stated that the Constitution guarantees Fundamental Rights and lays down Directive Principles of State Policy — in particular, that the State shall strive to promote the welfare of the people by securing a social order in which justice (social, economic, and political) shall inform all institutions. More specifically, the State's policy must secure:

• That all citizens, men and women equally, have the right to an adequate means of livelihood.
• That the ownership and control of the material resources of the community are distributed so as to best serve the common good.
• That the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

Why Planning? The Global Context

The idea of planning as a way to rebuild an economy had gained enormous public support worldwide in the 1940s and 1950s. Three major experiences contributed to this consensus:

• The Great Depression in Europe, which showed the catastrophic consequences of unregulated markets.
• The inter-war reconstruction of Japan and Germany, where state-led coordination played a key role.
• Most strikingly, the spectacular economic growth achieved by the Soviet Union in the 1930s and 1940s, despite heavy odds.

Thus, the Planning Commission was not a sudden invention. It was rooted in a global intellectual climate that favoured state-led development.

The Bombay Plan: Business Backs Planning

A common assumption is that private industrialists and big business entrepreneurs are always opposed to planning — that they want an open economy with no state control over capital flows. That was not the case in India. …