Growth refers to increase in the country's capacity to produce the output of goods and services within the country. It implies either a larger stock of productive capital, or a larger size of supporting services like transport and banking, or an increase in the efficiency of productive capital and services.

Equity means that every Indian should be able to meet his or her basic needs such as food, a decent house, education and health care. It also implies that inequality in the distribution of wealth should be reduced.

Growth, modernisation and self-reliance, by themselves, may not improve the kind of life which people are living. A country can have high growth, the most modern technology developed in the country itself, and also have most of its people living in poverty. It is important to ensure that the benefits of economic prosperity reach the poor sections as well instead of being enjoyed only by the rich.

Therefore, growth with equity as a planning objective means that while the economy grows and increases its productive capacity, the benefits of this growth should be distributed equitably among all sections of society. This ensures that economic prosperity reaches the poor sections as well, and not just the rich.

The planners have to ensure that, as far as possible, the policies of the plans do not contradict these goals. Due to limited resources, a choice has to be made in each plan about which of the goals is to be given primary importance, but the ultimate aim is balanced development.