The Planning Commission was set up by a Resolution of the Government of India in March 1950.
It was set up in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community.
The Planning Commission was charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities.
Jawaharlal Nehru was the first Chairman of the Planning Commission.
The Prime Minister is the Chairman of the Planning Commission, which works under the overall guidance of the National Development Council.
The commission has a deputy chairman. He is the de facto executive head (i.e., full-time functional head) of the commission. He is responsible for the formulation and submission of the draft Five-Year Plan to the Central cabinet. He is appointed by the Central cabinet for a fixed tenure and enjoys the rank of a cabinet minister.
The Deputy Chairman and the full time Members of the Commission, as a composite body, provide advice and guidance to the subject Divisions for the formulation of Five Year Plans, Annual Plans, State Plans, Monitoring Plan Programmes, Projects and Schemes.
Ex officio members of the Commission included the Finance Minister, Agriculture Minister, Home Minister, Health Minister, Chemicals and Fertilisers Minister, Information Technology Minister, Law Minister, Human Resource Development Minister and Minister of State for Planning.
The 1950 resolution setting up the Planning Commission outlined its functions as to—
[a] Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement;
[b] Formulate a Plan for the most effective and balanced utilisation of country’s resources;
[c] On a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage;
[d] Indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan;
[e] Determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects;
[f] Appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary; and
[g] Make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it, or on a consideration of prevailing economic conditions, current policies, measures and development programmes or on an examination of such specific problems as may be referred to it for advice by Central or State Governments.
It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction.
Planning Commission plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development.
The emphasis of the Commission is on maximising the output by using our limited resources optimally.
Instead of looking for mere increase in the plan outlays, the effort is to look for increases in the efficiency of utilisation of the allocations being made.