In 1950, the government set up a Planning Commission to help design and execute suitable policies for economic development. There was a broad agreement on the “mixed economy" model. Here, both the state and the private sector would play important and complementary roles in increasing production and generating jobs. Now, it was on the Planning Commission to define which industries should be initiated by the state and which by the market and how to achieve a balance between the different regions and states.

In 1956, the Second Five Year Plan was formulated which focused on the development of heavy industries such as steel, and on the building of large dams. These sectors would be under the control of the state. This focus on heavy industry and the effort at state regulation of the economy was to guide economic policy for the next few decades.