• Define planning. What are its characteristics?
Ans: Defination of planning given by Prof. Dickinson. According to him, "Economic planning is the making of ma)or economic decisions - what and how much is to be produced; how, when and where it is to be produced and to whom it is to be allocated - by the conscious decision of a comprehensive survey of the system as a whole". Prof. Loucks defines planning as "the shaping of all economic activities into group-defined spheres of action, which are rationally mapped out and fitted, as parts of a mosaic, into a coordinated whole, for the purpose of achieving certain nationally conceived and socially comprehensive goals. There are three important characteristics of planning. In the first place, there is a definite planning authority, whether it be the government or another body specially constituted like the Planning Commission in India . This planning authority is entrusted with the task of surveying the resource of the country, fixing up targets and laying down the methods for reaching these targets. If the government itself is the planning body, it also executes the plan thus formulated. It is not necessary that the planning authority should have supreme or dictatorial powers. It may be dictatorial, or it may work subject to the democratic control of a parliament as in India . It may even delegate some of its powers to other agencies, but the plans of all such agencies taken together must fit into the common pattern laid down by the planning authority. The second characteristic of planning is that the decisions are based on a survey of the economy as a whole. The planning authority acquires comprehensive knowledge of all resources that the economy possesses. Moreover, it keeps in view the needs and requirements of the economy as a whole, and not merely of some particular sectors of it, when it allocates the resources for various uses. In third place, the planning authority deliberately takes decisions with regard to the use to which various resources in the economy are put in. The economic life of the country concerned is not left to mere chance, or to the working of free competition. Planning implies the conscious and deliberate choice of economic priorities by the planning authority. An unplanned economy is characterized by the absence of these three characteristics. In an unplanned society, each individual is free, within such legal limits as may be laid down by the state, to make use of the resources at his command in the manner he thinks best. Naturally, he does not take a comprehensive view of the economy as a whole. He has, at his command, only a part of the total resources of the community. He uses these resources in such a way as to make the largest profit for himself, without any thought of the effects of his actions on others or on the economy of the country as a whole
4·12 Explain the objectives of planning.
Ans : The objectives of planning, however, are not the same for all countries, nor are they the same for any country at all times. What precisely arc the objectives of planning depend on the stage of economic development of the country concerned, the socio-economic conditions prevalent there at the time of planning, and the requirements for a particular situation. Keeping the broad objective of accelerating economic growth and of raising the standard of living of the people, the major objectives may be listed as follows:
(1) Achieving full employment.
(2) Maximizing national income and raising living standards.
(3) Rapid industrialization.
(4) Achieving self-sufficiency m food and raw materials.
(5) Reducing inequalities.
(6) Redressing unbalances in the economy.
It may be noted, however, that these objectives are interrelated and complementary, and not mutually exclusive of one another.
(1) Achieving Full Employment: One of the major objectives of planning especially in economically advanced countries is to provide full employment to its citizens. Unemployment is one of the by-products of capitalism, and is considered by many to be the biggest curse of a modern capitalist society. In order to end unemployment, the development plans are directed to those directions and those sectors of the economy where there is more unemployment. Towards this end, the state can redistribute the labor force and productive resources, and thus create more jobs in those sectors. Planning in a developing country like India may not be able to create the conditions for full employment in the near future, but it can reduce the incidence of unemployment.
(2) Maximizing National Income: Another laudable objective of economic planning is to maximize the national income and to raise the living standard of the people. The planners pursue this objective relentlessly. The reason is that only planned efforts can raise the national income appreciably. The unplanned development efforts do not bring any substantial progress in this direction since the productive efforts are frittered away in an uncoordinated economic activity.
(3) Rapid Industrialization: This objective assumes more importance in the case of those countries which have been left behind in the race for industrialization, it has been realized that industrialization plays a very important role in raising the national income and in solving the problem of unemployment, it is difficult for a country to achieve prosperity by merely confining itself to agriculture. The economies, which are predominantly agricultural, are bound to remain backward unless attention is paid to industrialization.
(4) Achieving self-sufficiency: As a first step towards more systematic and intensive planning, it is important to make the country self-sufficient in the matter of food and essential raw materials. This self-sufficiency provides a solid base for the country and prepares it for further development through industrialization. If a country is not self-sufficient in the matter of food and raw materials, mere political freedom may prove to be a myth.
(5) Reducing Inequalities: It is generally realized that political equality is meaningless unless it is accompanied by economic equality. Glaring inequalities of wealth, income and opportunities are against the spirit of democracy. Bridging the gulf between the rich and the poor is one of the most important objectives of planning.
(6) Redressing Imbalances in the Economy: Often it is found that the
economic development in a country is lopsided. An economy, for example, may be predominantly agricultural, or it may depend too much on the export of oil or minerals. In our own country, nearly 75% of the people are dependent on agriculture and related activities. This is an example of an unbalanced economy. To lend stability to the economy, it becomes essential to reduce this imbalance. If there are such imbalances in the economy of a country, removing them becomes an important objective of planning. In addition, there is usually a regional imbalance in respect of industrialization in many of the developing countries. When this is the case, the plans are aimed to correct such regional imbalances too.
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