Planning is a basic management function involving formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources.
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| What is economic planning? | Planning is a basic management function involving formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources. The planning process (1) identifies the goals or objectives to be achieved, (2) formulates strategies to achieve them, (3) arranges or creates the means required, and (4) implements, directs, and monitors all steps in their proper sequence.
Planning in India derives its objectives and social premises from the Directive Principles of State Policy enshrined in the Constitution. |
| What is the need for economic Planning? | 1. Less per capita income and poverty.
2. High rate of growth of population. 3. Industrial growth was negligible. 4. Literacy levels were so low. 5. Backward technology. 6. Traditional attitude. 7. Social and economic problem created by partition of country. |
| What are the Objectives of Economic Planning? | 1. To increase per capita and national income
2. Higher level of employment 3. Price stability 4. Reduction of inequalities in income distribution 5. To remove BOP difficulties 6. Reducing regional disparities 7. Self-sufficiency in food 8. Redressing imbalances in the economy 9. Increase in savings 10. Reducing population growth 11. Reducing poverty levels 12. Provision of social services 13. Long term economic growth |
| What are the different types of economic planning? | a. Imperative Planning: Under this type of planning, economic decisions are made through a central planning authority instead of a market system. Allocation of resources, the mix of output and the distribution of output among the people are determined centrally in accordance with the predetermined plans and targets. In fact, administrative control and regulation from the central planning authority flows in all directions. Under imperative planning, there is the absence of institutions of private property, competition and profit motive of industrialists, etc. It is because of the absence of these institutions and the presence of the state in directing and regulating economic activities, the planning authority formulates and implements plans in the best interests of the country.
b. Indicative planning: Indicative planning or planning by inducement is found in capitalist countries as well as in mixed economies, like India. The essence of indicative planning is that it recognizes not only consumers’ sovereignty but also producers’ freedom so that the targets and priorities of the plans are achieved. It then involves a middle path of planning mechanism and market mechanism—a kind of coordination between private and public activities. Indicative planning has one distinct advantage. It supposedly increases productivity because each sector of the economy pushes its own contribution to a point that previously would have been considered too dangerous. |