Assertion: The Planning Commission of India opted for five-year plans (FYP).
Reason: India was on friendly terms with the USA, so it decided to follow the USA.
Answer & explanation
Correct answer: option 4
•The concept of Five-Year Plans in India was inspired by the Soviet Union's (USSR) central planning system.
•Nehru was impressed with the Soviet Union's approach and believed that a similar model could be adapted to India's needs to achieve rapid economic development and reduce poverty.
•The idea of the FYP is very simple: the Government of India prepares a document that has a plan for all its income and expenditure for the next five years.
•Accordingly, the budget of the central and all the State governments is divided into two parts: ‘Plan-budget’ and ‘Non-Plan’ budget .
•A five-year plan has the advantage of permitting the government to focus on the larger picture and make a long-term intervention in the economy.