ECONOMIC PLANNING: MEANING AND TYPES

There is lack of unanimity amongst economists and political philosopher as to what planning means. No accurate and universally acceptable definition can be afforded. The suggestion underlying planning is a conscious and deliberate use of the resources of the resources of the community with a view to achieving certain targets production. The State through a planning authority takes the responsibility of planning. It represents a complete break from the policy of laissez-faire. Thus, Prof. H. D. Dickinson defines economic planning as the making of major economic decisions-what and how much is to be produced and whom it is to be allocated by the conscious decision of a determinate authority, on the basic of comprehensive survey of the economic system as a whole. In the word of the second five year plan of India, economic planning is essentially a way of organizing and utilizing resources to maximum advantage in terms of defined social ends. Two main concept of planning are :( 1) A system of ends to be pursued (2) Knowledge as to the available resources and their optimum allocation. The idea of planning will be clear by drawing a distinction between a planned economy and an unplanned economy.

 

Distinction between Planned and Unplanned Economy

 

The unplanned economy relies on market mechanism for the utilization of the community’s resources for productive purpose. The market mechanism interprets consumer’s preferences to the producer through the medium of higher prices and promise of higher profits. A planned economy on the other hand represents a much more determinate organization of resources and the commodities to be produced. The State is vested with the necessary powers to pursue these goals and exploit the resources along the pre-determined channels in conformity with the goals already fixed.

   Thus the main implication of planning are:-

a)      Formulation of objectives or goals;

b)      Fixing targets to be achieved and priorities of production for each sector of the economy;

c)      Mobilization of the financial and other resources required for the execution of the plan;

d)      Creation of the necessary organization or agency for the execution of the plan

e)      Creation assessment machinery for assessing the progress made. 

In the words of Mrs. Barbara Wootton, Planning may be defined as the conscious and deliberate choice of economic priorities by some public authority. But the public authority must also carry out these priorities through the agency of the State organs.

   Thus, planning in short in short may be defined as conceiving initiating regulating and controlling economic activity by the State according to set priorities with a view to achieving well-defined objectives within a given time.

 

Forms of Planning

 

Authriorian and Democratic Planning

 

The type of planning that has been done in Soviet Russia, China and other socialist countries is authoritarian countries is democratic planning. In authoritarian planning the government is the sole centralized agency which draws the plan and implements it. It is more comprehensive, systematic and rigid-and is more efficient. In democratic planning the plan is prepared by an expert body called the planning commission, which as outside the government or the executive and it is finally approved by legislation which represents the people.

 

General and Partial Planning

 

Several other varieties of planning are now known to the student of economics. There is general planning in which a comprehensive and integrated plan is conceived, initiated and executed by a central authority. The plan covers all aspects of the economy and the central authority completely controls the investment and utilization of resources.

As against general planning there is partial planning covers only some important sectors of the economy. Strictly speaking partial planning is no planning.

 

purpose and formation Planning

 

Then again planning may be attempted within the existing socio-economic framework or it may seem to change the existing order radically. The former is known as functional planning and the latter structure planning. Functional planning assumes that planning is possible even in a capitalistic economy, whereas advocates of structure planning think that planning and capitalism are incompatible. Quiet respectable opinions have taken sides on this question. For instance Dr. Ludwig Von Misses is of the view that Planning and capitalism are utterly incompatible. On the other hand Professor Landauer holds the opinion that planning and capitalism could be reconciled. We are inclined to agree with the latter view and hold that even capitalist countries can have a measure of planning and benefit from its technique in order to carry the economy forward.