Economic Planning
Introduction to Economic Planning
Jawaharlal Nehru, the architect of planning in India set up the National Planning Committee in 1938. The Committee considered all aspects of planning and produced a series of studies on different subjects concerned with economic development. The Committee laid down that the State should own or control all key industries and services, mineral resources and railways, waterways, shipping and other public utilities and, in fact, all those large-scale industries which were likely to become monopolistic in character. The Committee felt that it was not possible to draw up a scheme of national planning without including agriculture.
The Committee aimed at doubling the standard of living of the people in ten years. S h Besides the National Planning Committee (NPC), eight industrialists conceived a ” Plan of Economic Development” which was popularly known as the Bombay Plan. There was also a Gandhian Plan which was prepared by Shriman Narayan. The world-famous revolutionary M.N. Roy formulated the People’s Plan. All these plans are of historical importance only because they remained on paper and were never implemented. The first attempt to bring about economic planning in India was perhaps made by Sri M. Vishveshwaraiah in his book titled “Planned Economy for India; – . published in 1934. Just after the attainment of Independence, the government set up the Planning Commission in 1950 to assess the country’s need for material capital and human resources to formulate a plan for their more balanced and effective utilisation. The First Five Year Plan commenced in 1950-51 and it was followed by a series of Five-Year Plans.
Check out Economic development notes in detail.
Meaning of Economic Planning
Economic Planning implies the existence of an economic system in which each production unit uses only the productive resources allocated to it, and disposes of its product according to the directives from the central authority. This concept of economic planning is narrow and covers only what is often described as collectivist economic planning which has been adopted in socialist countries. In another sense, economic planning means merely laying down the targets for some public and/or private enterprises. Such a policy is sometimes pursued in capitalist economies. In these economies, the State does not take an overall view of the economy. · Therefore, this type of planning may at best be called partial or piece-meal planning. In the third sense, planning refers to the setting of targets for the economy as a whole and allocating the countries between the various branches of the economy. India has adopted economic planning in this sense. In the fourth sense, the term planning refers to the system whereby the government enforces upon private enterprises certain targets which it determines for them. This so-called system of economic planning includes various control measures to regulate the activities of private enterprises. 2010: Simonos, 10 OS nogo o In India, development plans were formulated and carried out within the framework of the mixed economy. Mixed economies are characterised by the coexistence of private and public sectors.
It basically comprises four distinct productive activities :
(1) Subsistence farming and handicrafts;
(2) Small-scale individual and family-owned commercial business and industry;
(3) Medium-sized commercial enterprise in the industry, trade, transport and agriculture; and
(4) Large manufacturing enterprises, mining companies and plantations, producing for domestic and/or foreign markets.
The public sector generally remains confined to infrastructure and basic and heavy industries. With such an institutional setting of the Indian economy, one can identify two principal components of economic planning. The government not only mobilises domestic resources but also raises foreign finance to carry out such projects which are expected to induce productive activities in the private sector.
From this point of view development of infrastructure, particularly railways, hydrocele projects and irrigation system receives the setting up of heavy industries involving large finance and long gestation period. The government has also adopted on the one hand certain economic policies (e.g. taxation, industrial licensing, tariffs, wages, prices and interest rates) which stimulated private economic activity, and on the other introduced restrictive physical controls to ensure harmony between the social objectives of the government and the behaviour of the private producers and businessmen. – From the above characterisation of planning in India, it is clear that economic planning in this country did not entirely replace the market. In fact, the market and economic planning are complementary to each other.
Check out these notes on Objectives of Economic Planning.