The concept of Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment is the overarching framework for national economic management, a concept that has evolved significantly since Independence. Its origin lies in the post-1947 need for systematic development to address poverty and low industrial growth. The primary institution created to solve this problem was the Planning Commission, established on March 15, 1950, by a Government of India resolution.
The Planning Commission worked by formulating Five-Year Plans, the first of which was launched in 1951, to achieve objectives like economic growth, poverty reduction, and employment generation. This mechanism involved a top-down approach to mobilization of resources, which refers to the process of acquiring and allocating financial, human, and natural resources for development. Financial resources are mobilized primarily through taxation, public borrowing, and foreign investment to fund public investment and development initiatives. The ultimate goals of this planning were growth, development, and employment, measured by metrics like GDP increase and job creation.
The system changed recently when the Union Cabinet dissolved the Planning Commission and replaced it with the NITI Aayog (National Institution for Transforming India) on January 1, 2015, via a Cabinet resolution. The NITI Aayog is a policy think tank that replaced the centralized planning model with a bottom-up approach, aiming to foster cooperative federalism by involving state governments in policy-making. Consequently, the system of Five-Year Plans was discontinued in 2017, transitioning to a more flexible framework. This new institution connects to the older system by retaining the core objectives of promoting economic development and providing strategic input to the government.