Objectives of Planning in India

The various objectives of economic planning in India are drawn keeping in view its socio-economic problems.

Accordingly the objectives are:

  1. Economic growth
  2. Increase in employment
  3. Reduction in inequality of income
  4. Reduction in poverty
  5. Modernization of the economy
  6. Ensuring social justice and equality

1. Economic Growth

The objective of achieving economic growth implies that the real national income and per capita income must grow every year at a targeted rate. Real national income is the measure of national income at a given years price or at a constant price. Real per capita income is the average income of individuals in the economy.

It is argued that in order to achieve higher standard of living for each individual or household and the society as a whole,
both per capita income and national income must grow in real terms. Since income represents purchasing power, increase in income will enhance the purchasing power of people and the country.

When purchasing power will increase then individuals can buy more goods and services to satisfy their wants. The country as a whole can pay for its purchases from abroad called import. Increase in real income also means that the output level or quantity of output is higher than before. Here output includes output in different sectors of the economy such as agricultural output, industrial output and services to satisfy the needs of India’s growing population increase in output every year has to be achieved.

To achieve higher rate of output the economy must increase its rate of investment to create infrastructure and capital stock. Infrastructure includes power projects, roads, railways, airports, ports, telecommunication network, buildings etc. Capital stock includes plant, machinery, banking and insurance etc. Investment in all these things is necessary to achieve economic growth in real income, hence the planners of the country set a target for growth in each five year plan keeping in view the growth of population and demand for goods and services, etc.

2. Increase in Employment

Employment refers to engagement of the labour force in gainful economic activity such as production of goods and services.

Income is generated through the production process where the production process involves employment of factors of production provided by the households. Factors of production include land, labour, capital and organization or entrepreneurship. These factors are owned by the households of the country. As factors are scarce resources and needed to produce goods and services, it is important for the government to create opportunities where in they can be properly used or utilized.

The production capacity of an economy depends on the amount of the factor resources it possesses. The required amount of output can be generated if these factors of production get employment.

The value of the output then can be distributed among the factors as their income in the form of wage for labour, rent to the owner of land and building, interest to the owner of capital and profit to the entrepreneur. If the country is not able to create employment opportunities to gainfully engage the factors of production, the required amount of output can not be produced and hence income can not be generated.

Take the example of labour resources in the country. The population of the country supplies labour force who are in the age group of 15 to 59 years. Every year due to increase in population the number of people in the labour force is also increasing. Most of them are also educated. If there is no enough scope to get employment then they will remain unemployed and unutilized.

Infact the unemployment situation in India is very bad. Besides causing increase in consumption without corresponding increase in production, unemployment also is a cause of various social problems such as poverty and crime, etc. So planners of the Indian economy put creation of employment as a major objective of five year plans.

3. Reduction in Inequality of Income

India is a country with diverse economic standard of its population. This means that in terms of income level, India lacks uniformity. A large section of India’s population belong to lower income group and termed as poor where as a few are very rich with very high level of income.

Income disparity is a major concern of the social angle, women are the worst affected in terms of income standard irrespective of their caste or religion. Similarly the scheduled caste and scheduled tribe population belong to the marginalized section of Indian society as they are at the bottom of the pyramid of development.

One of the major reasons of inequality in income is the unequal distribution of asset holding such as per capita land holding, possession movable and immovable property from inheritance etc. A majority of India’s population live in rural area and work in agriculture. But a few are big land lords and majority are marginal or small farmers and agricultural labourers.

Agricultural labourers are so called because they do not have their own land to cultivate and move from one place to another in search of job on a daily or weekly wage basis. Their situation in worse because of their own illiteracy and lack of scope to organize themselves. One to their low income they do not have anything to begin to their reset generation on the other hand landlords enjoy higher returns to their property and due to existence of law of inheritance the property remains with their future generations.

Hence, rich remains rich and poor remains poor in the country due to possession and lack of private property respectively. India is badly affected due to this inequality . The poor people are not able to support the market due to lack of purchasing power where too much purchasing power with the rich has caused wasteful consumption to increase.

Most of the social evils are created due to inequality. Hence, our planners aimed at reducing the inequality in income distribution through planning.

4. Reduction in Poverty

Another major objective of planning in India is "reduction In poverty". At the time of independence more than fifty percent of India’s population was poor. By the year 2014, nearly 27 to 28 percent of India’s population is under poverty as per governments estimates.

There are lot of people in the country who are not even getting a square meal a day. Lack of employment is a major cause of poverty. It is aggregated by unequal distribution of national wealth and income.

Poverty is termed as a curse on human dignity and it has seriously tarnished the image of India in the world. Developed countries do not count India seriously due to its inability to remove poverty. It is proper planning to remove poverty completely from the country.

5. Modernisation of the Economy

India has been a country of continuous exploitation by foreign powers such as the Mughals who ruled for more than two hundred years and the British who also ruled the country for another two hundred years. The British in particular, left the country in dine poverty and underdevelopment when they handed over power to Indian government in 1947.

Because of the historical reasons Indian economy could not rise from its traditional level of functioning. It remained an agrarian economy and industrially backward. There was no development in now technology and technological upgradation. Lack of modern technology is a major reason for Indian economy to suffer from low productivity in agriculture and lack of industrial development.

At the time of independence and for many more years after that, the major contributor to India’s GDP because of underdeveloped industrial and service sector. Combined with his lack of better education and skill development of the population, the occupational structure has also remained biased towards agriculture.

Hence, to reverse such trend it is necessary to change the structure of GDP of India by improving the quality of human resources and developing industries and service sector. This can be done by modernization of the economy.

6. Ensuring Social Justice and Equality

Indian planning also aimed at achieving a socialistic pattern of society. It can be achieved by ensuring its population social justice and equity. In fact all the objectives are necessary to achieve social justice. But the sufficient condition for sustaining social justice and equitable distribution of income is to introduce reforms in various sectors by changing the age old systems which have perpetuated poverty and inequality and obstructed development of industrial and service
sector or caused low productivity in agriculture.

So the planners thought to introduce reforms in agriculture and economic policy so that they facilitate growth and equitable distribution of the benefits of development.