The model of planned economy was adopted in India to address the regional imbalances left behind by colonial rule. Comment.

Introduction

Correcting regional imbalance was a genuine and stated objective of Indian planning — the Second Plan and successive documents named "balanced regional development" explicitly. But it was one objective among several, and not the primary one. The Five Year Plans were driven at least as much by the goals of raising the savings and investment rate, building a heavy-industry base and reducing external dependence.

The colonial inheritance

• Development was port-led and export-oriented: Bombay, Calcutta and Madras presidencies concentrated modern industry, banking and rail hubs, while the interior served as a raw-material periphery.
• The railway network was built to move commodities to ports, not to integrate internal markets.
• Deindustrialisation of handicrafts hollowed out inland artisanal towns; the permanently settled zamindari belt of eastern India was left with weak agrarian investment.

How planning addressed it

• Public-sector location. Steel plants at Bhilai, Rourkela and Durgapur, and later Bokaro, were sited on the mineral belt of central and eastern India — deliberately away from the colonial coastal core. Similar logic placed heavy engineering at Ranchi and fertilizer and refinery capacity inland.
• Backward-area policy. The Pande and Wanchoo Working Groups (1968–69) produced the framework of licensing preferences, transport subsidies, capital subsidies and concessional finance for industrially backward districts.
• Fiscal transfers. The Gadgil formula (1969) and its Gadgil-Mukherjee revision weighted plan assistance towards population and per capita income, and Special Category Status gave hill and border states a 90:10 grant-loan mix.
• Area programmes. Drought Prone Areas Programme, Desert Development Programme, Hill Area Development Programme, Tribal Sub-Plan, and command-area development.

The record

• Partial success: the mineral belt acquired industry it would not otherwise have had; Special Category transfers materially raised expenditure capacity in the north-east and Himalayan states.
• But divergence persisted and later widened. The licence-permit framework — analysed in our note on industrial policy 1950-1991 — often protected incumbents in already-advanced regions; enclave PSUs generated few local linkages; and land reform, on which agrarian catch-up depended, was implemented unevenly.
• After 1991 private investment followed infrastructure, human capital and governance quality, and the coastal and southern states pulled further ahead. The debate resurfaces at every Finance Commission over transfer formulae and the delimitation question.

The present phase

With the Planning Commission replaced by NITI Aayog in 2015, spatial equity is pursued through cooperative and competitive federalism, the Aspirational Districts Programme and Finance Commission devolution rather than plan allocations.

Conclusion

The statement captures a real motive but overstates it as the reason for planning. Planning was adopted primarily to industrialise a capital-scarce economy quickly; regional balance was a constitutional and political commitment layered onto that project, pursued with some genuine successes and a persistent gap between intention and outcome. The full arc is traced in our guide to the evolution of planning in India.