Hello Friends, welcome to my website Khan Study. In today’s article we are going to know about What is Economic Planning? (Economic Planning in India). So let’s discuss in details.
What is Economic Planning?
Economic planning is a technique, a means to an end being the realization of certain predetermined and well defined aims and objectives laid down by a Central planning authority. The end may be to achieve economic, social, political or defense or military objectives. The concept of economic planning was first developed by Plato in his magnum opus -“The Republic“.
According to Dalton, ” Economic planning is the deliberate direction by persons in charge of large resources of economic activity towards chosen ends”.
Define Economic Planning according to Lewis
According to Prof. Lewis, there are six types of senses in the term planning generally used in economic literature, They are-
• There are so many literature in which we have to refers only to geographical coverage, residential building, cinemas and the like. It is generally called town and country planning.
• A plan economy is that in which the level of productive unit used only the resources of man, materials and equipment allocated to it by quotas and disposed of it, producer exclusively to persons or firms indicated to it by Central government.
• Planning means future arrangement of monetary expenditure incurred by the government.
• Planning means any settings of product targeted by the government.
• Planning has targeted to set for the economy as a whole. It has to allocate all the country’s labour, foreign exchange, raw-materials and other resource between the various branches of an economy.
• Finally, Planning is a process to describe the means which the government used to fry to enforce upon enterprises which have been previously determined.
According to Lewis Lordwin, “Economic planning is a scheme of economic organization in which individual and separate plants, enterprises and industries are fretted as co-ordinate units of one single system for purpose of utilizing available resources to achieve the maximum satisfaction of people’s need within a given period”.
Need for Economic Planning
Economic planning is a technique through which an economy can achieve certain aims. The main justification of economic planning or the need of economic planning are mentioned in the following ground-
• One of the primary objectives of planning in UDC is to increase the growth rate.
• Another justification of planning arises in UDC to improve and strengthen the market mechanism. The market mechanism works imperfectly in UDC (Under developing Country) because of the ignorance. A large part of economy comprises the non-monetized sector.
• The need for planning in UDC is required in order to remove poverty and wide spread unemployment. For this reason providing gainful employment opportunities to the increasing labour force is considered as an important aim of planning.
• The need for planning also arises in order to develop the agricultural sector. This is because development of agriculture is essential to supply food grains and raw materials. On the other hand majority of UDCs population engage in agriculture.
• The agricultural and industrial sector can not develop in the absence of economic and social overheads. Such as roads, power irrigation etc. are indispensable for agricultural and industrial development. With economic planning it is not possible to developed such facilities.
• Economic planning is an essential component of economic development of the UDCs. Through economic planning socio-economic maladjustments can be removed successfully.
Types of Economic Planning
The important types of economic planning of India are given below-
• Planning by Direction – Planning by direction is also known as planning by command or order. In this type state plays an important role. Here the central planning authority takes the decisions and targets of the planning. This type of planning is followed by China.
• Planning by Inducement – Planning by inducement is a democratic planning. Under this type of planning both the public and private sectors play important role. There is freedom of production and consumption. Indian economy follows planning by inducement.
• Financial Planning – Finance is the main key to economic planning. Under financial planning resources are allocated in financial terms. It aims at ensuring a balance between demand and supply and avoid inflationary hazards.
• Physical Planning – Physical planning refers to the allocation of resources in physical terms, such as manpower, raw materials, capital equipment, etc. Here the consumption and targets are determined in physical terms.
• Indicative Planning – Indicative planning prevails in France. It is a popular type of planning where private and public sectors are playing important role. It is argued that it can promote rapid economic growth without bureaucracy.
• Imperative planning – Under imperative planning the state is responsible for the formulation as well as implementation of the plan. The production units are owned and managed by the state.
• Democratic Planning – Democratic planning implies planning within democracy. Under democratic planning there should be a democratic government. Thus there government plays an important role.
• Totalitarian Planning – In this planning there is a central control and direction of all economic activity in accordance with a single plan. Here the government control is very strong. Most of the communist countries follow this planning process.
• Rolling and fixed planes – In a rolling plan, every year there new plans are made and acted upon. Prof. Myrdal was the first economist to advocate a rolling plan for developing countries.
In contrast to the rolling plan there is a fixed plan for four, five, six or seven years. It lays down definite aims and objective which are required to be achieved during the plan period.
• Centralised and decentralised Planning – Under centralised planning the entire planning process in a country is under a central planning authority. This authority formulates a plan, fixes objectives, targets and priorities for every sector of the economy.
Decentralised planning refers to the exaction of the plan from the grass roots. Here plan is formulated by the local government. Generally it is applicable in case of federal government.
Objectives of Economic Planning
In a developing country like India, economic planning is playing a very important tole towards its economic development. The major objective of economic planning in India can be summarised as follows-
• Attainment of higher rate of economic growth – Attainment of higher rate of economic growth rate received top most priority in almost all the five years plans of the country. As the economy of country was suffering from acute poverty. Thus by attaining higher rate of economic growth, education of poverty is possible and the standard of living of people can be improved.
• Attaining economic equality and Social justice – Reduction of economic inequalities and eradication of poverty are the second group of subjective of almost all the five year plans of our country particularly since the Fourth five year plan. Due to the faculty approach followed in the initial part of our planning economic inequality winded and poverty become acute.
• Achieving Full employment – Five years plans of India gave importance on the subject to employment generation since third plan. The generation of more employment opportunities was considered as an objective of both the third and fourth plan of our country.
One of the major objective of seventh plan was a faster growth of employment opportunities. The employment potential would grow 4% as against the 2.6% growth in the labour force.
• Attaining Economic self Reliance – One of the very important objectives of Indian economic planning is to attaining economic self reliance, but this objective attained its importance only, when the Fourth plan aimed at elimination of the import of food grains under P1480.
Fifth plan also laid much importance on the attainment of self reliance. Thus this plan aimed at achieving self sufficiency in the production of food grains, raw materials and other essential consumption goods.
• Modernisation of various Sectors- Another very important objective of Five year plans of our country was the modernization of various sectors. More specially the modernisation of agricultural and industrial sectors.
• Reducing imbalance in the Economy – Regional disparities and imbalance in the economy have become so acute in India that it needed special attention in our five year plans.
Thus by regional development we mean economic development of all the regions by exploiting various natural and human resources and by increasing their per capita income and living standard.
So friends, this was the concept of Economic Planning (Economic Planning in India). Hope you get the full details about it and hope you like this article.
If you like this article, share it with your friends and turn on the website Bell icon, so don’t miss any articles in the near future. Because we are bringing you such helpful articles every day. If you have any doubt about this article, you can comment us. Thank You!
Read More Article
• What is Economic reforms? | Economic reforms in India