Meaning of Planning
Thus the main implications of pi planning are ta. Formulation of objectives goals. Fixing targets to be achieve and priorities of production for each sector of the economy. Mobilization of the finance and other resources required for the execution ( If the plan; Id).Creation of the necessary organisation or agency for the execution of the pal.Creating assessment mac :finery for assessing the progress made. It is immaterial whether thee is public ownership and/or control of resources not. although public ownership and control would be more conducive to effective planning. State initiate.State regulation and control are, however, eds essential for successful execution ‘of a plan. Robbins. Planning in the modem jargon involves governor control of production in some form or other.A central economic authority regulates output, price and costs, Thus, planning. in Hinayana be defined as confiding insinuating, regulating and controlling economic lording to set priorities.
FORMS OF PLANNING
Tile type of planning that has been done .China and other socialist countries is Atalanta planning and that in India and other crane countries is democratic planning. In authoritarian Ian planning, the government is the sole centralized agency which draws the plan and implements it. It comprehensive. systematic and rigid-and is more:efficient. In democratic planning. (he playlists pared h) an expert body called the planning; commie. which is outside the government other executive and It is finally approved by legislature which represents the people. It is based on the system of free enterprise, but economic activity outside the public sector IS sought to be regulated and guided indirect toy by providing incentives for investment through fiscal or monetary policies.
Planning by Inducement and Planning by Direction
Sometimes the State try to achieve objectives of planning in an indirect manner. There is private enterprise throughout the economy and market mechanisms in full operation. The State just offers certain inducements and incentives. That is what a predominantly capitalistic economy like the American economy would do. As against induced planning or indicative planning. there is compulsory planning or planning direction under a central directing authority.
Planning by inducement IS often referred to as indicative planning. In this type of planning. the planner either subsidies production or controls prices, if it is intended to increase the consumption of a commodity. The first acts on the supply side and the latter on the demand side. Cheaper price is an inducement for the consumer and subsidy an in recrudescent producer. This is planning, through the market mechanism. The citizen wants freedom of choice in consumption. This freedom exerts pressure for free adjustment of production to consumption. Similarly. the worker demands freedom to choose his own job, This means that besides consumers market there must also be a labor market. This Caves a narrow sphere for State control.
A against these merits. there are some ;” too: (a) It fails to achieve the objectives of planning or target. of production: (b) The private entrepreneurs care more for profit than for the growth of the economy; (c) The fiscal and monetary policies of the government arc not so successful in the under-developed countries; controls lead to black markets. (d) The producers may not find the incentives offered by the state attractive enough to follow the state guide-lines. The disincentives for the consumers may not be deterrent enough to curb wasteful consumption; (e) The working of the market forces fail to bring about proper adjustment between demand and supply and thus create insurances in the economy.
Planning by direction implies minute and detailed instructions given both to producers and consumers. A list of all commodities to be produced with the quantity of each has to be prepared as well as a separate list for each of the complements and substitutes. Planning by direction is very comprehensive. It covers the entire economy. There is complete concentration of economic authority in the state. There is one authority which is in sole charge of planning. directing and execution of the plan in accordance with per determined target. and priorities, Only planning by direction can guarantee t e success of the plan. other the rage would turn 0 0 be mere pious.
These are a few difficulties or shortcomings of Planning by direction. But the choice between these two types of planning is determined by the system of government prevailing in the country. A Socratic government adopts indicative planning whereas a socialist saute will adopt planning by director.