1. The 20th century was an era of planning. Almost every country had some sort of planning. In
socialist countries, planning is almost a religion. Even in countries like the U.S.A. and the U.K.
with a capitalistic system, they have partial planning. The 19th century State was a Laissez
faire state. It followed a policy of non – intervention in economic affairs. But the modern State
is a Welfare State. The two World Wars, the Great Depression of 1930s and the success of
planning in former Soviet Russia have underlinedthe needfor planning. Planning is a gift of
former Soviet Russia to the world. For, it was the first country to practise economic planning
on a national scale.
According to Lionel Robbins, “strictly speaking, all economic life involves planning…. To plan is
to act with a purpose, to choose and choice is the essence of economic activity”.
In the words of Barbara Wootten, “Planning may be defined as the conscious and deliberate
choice of economic priorities by some public authorities”.
Many economists today agree that planning is an organized, conscious and continuous attempt
to select the basic available alternatives to achieve specific goals. Planning involves the
economizing of scarce resources
Features of economic planning
1.Central planning authority – Each country has to set up machinery, which will formulate
and implement the planning process. In India we have a planning commission which is headed
by a prime minister andwhich is responsible for the various aspects of planning. This planning
commission includes various experts like economists, financial experts, politicians, and other
government officers.
2. Survey of the Economy – A plan has to be based on a proper survey of the economy.
Including the strengths and the weaknesses of the economy, availability of resources and its
utilization, etc. Usually this survey is carriedout on an annual basis. In India we have CSO
(Central Statistical Organization) in different states, which is responsible for carrying out the
survey.
3. Setting objectives – The planning process should have certain objectives, which are to be
fulfilled or achieved. These objectives are laiddown in relations to future development of the
economy. Thus objectives can be to increase the employment or reduce unemployment, to
decrease poverty, etc. these objectives must be realistic andflexible so that if required
necessary changes can be carriedout in the objectives.
4. Priorities and targets –Once the objectives are decided the priorities andthe targets have to
be laid down. E.g. the objectives may be to increase the employment level. Within this the
priority may be to increase the employment for rural people or to increase the employment for
women. The target gives a definite number for achieving the objectives.
5. Strategy- The word strategy is a military word. Indicating the technique of reaching a
particular point. In the planning process different strategies would be requiredfor achieving
different objectives. These strategies are to be planned, implementedand properly discussed. A
proper strategy will help in achieving the target.
2. 6. Internal consistency and balance – The strategies which are decided should be internally
consistent and properly balanced otherwise it may lead to shortages and surpluses. The
balance in planning process includes the physical and financial balance. The physical balance
will try to ensure that the outputs of various sectors of the economy are properly balanced.
Otherwise it will lead to a situation of non-availability of raw material, manpower, etc. the
financial balance refers to balancing of income and savings to the supply of goods and services.
7. Mobilization of resources – In order to implement the plan various resources are required.
The sources of finance include taxation provident fund, deficit financing, etc. the planning
process has to ensure how much amount will be collected from each of these sources. A
planning process also has to consider how the private sector will be able to mobilize the
different resources.
8. Choice of planning a model – For implementing the plan for the economy various planning
models are available. The right type of planning model will have to be selectedwhich includes –
a) Aggregate Growth Model – In this model the aggregate Growth of the whole economy is
considered. B) Sectorial projection model – In this model the whole of the economy is divided
into sectors and planning is carriedout respectively for the sector. E.g. agricultural sector,
industrial sector, etc. c) Comprehensive inter industry model – This is the most
sophisticated model in which activities of all productive sectors of the economy are inter
related. Each industry is considered a producer of output and at the same time a user and
input from other industry. Depending upon the level of development of a country a country
may se more sophisticated model. India makes use of this sophisticated model.
9. Plan period – The planning process is for a particular time period. It may be for 5 years, 10
years or 15 years. In India the time frame adopted is 5 year plan in which the annual plan can
also be there in order to ascertain whether the targets are being achievedor not.
10. Efficient administration- A plan may be prepared but if it is not implementedn a right
and efficient manner then the targets and objectives will not be achieved. Proper
implementation of plan requires strong, efficient and non-corrupt administration.
11. Evaluation – A plan prepared and implementedmust be periodically evaluated. It may
become necessary to change the targets in certain situations. The reasons of not achieving the
targets will have to be discussed and this reasons will to be considered into future planning.
Tenth Five Year Plan (2002 – 2007)
The Tenth Five Year Plan aimedat explicitly addressing the issues of equity and social justice.
It fixed a target of 8 percent GDP growth rate for 2002 – 2007.
The key targets fixedfor the Plan are as follows :
1.Reduction of poverty by 5 percentage points by 2007 and 15 percentage points by 2012.
3. 2.Gainful employment to the addition to the labour force during the Plan period;
3.Universal access to Primary education by 2007 ;
4.Reduction in the decadal rate of population growth between 2001 to 2011 to 16.2 percent ;
5.Increase in literacy to 75 percent by 2007
6.Reduction in infant mortality rate (IMR) to 45 per 1000 live births by 2007 and to 28 by
2007;
7.Reduction of maternal mortality ratio (MMR) to 2 per 1000 live births by 2007 and to 1 by
2012.
8.Increase in forest and tree cover to 25 percent by 2007 and to 33 percent by 2012 ;
9.All villages to have access to potable water by 2012 ; and
10. Cleaning of all major polluted rivers by 2007.
The past experience raises doubts about fulfilment of many targets such as the GDP growth
rate of 8 percent, and fulfilment of employment target. Agriculture and small scale industries
are still at
