Meaning and Definition of Economic Planning
Economic Planning can be defined as the long term plans and decisions made by the central government for the development of the economy. This includes government spending on various schemes and programmes related to the economic development. In other words, economic planning is the process to achieve economic stability through effective utilization of national resources for the benefit of the society.
Contrary to this, laissez-faire approach involves no decision-making. It is usually dependent on the market forces to decide the nature, speed and direction of economic development.
There fore, an inclusive economic plan has to be prepared by the Government with the integration of public and private sector. This is basically done to achieve objectives of the economy through the implementation of Five Year Plan since 1951.
According to Fedynand Zweig___” Economic planning in this sense would mean drawing-up economic schemes with foresight and on a large scale it may be called planning within the economy”.
According to the Indian Planning Commission___” Economic planning is, essentially a way of organizing and utilizing resources to maximum advantage in terms of defined social ends”.
According to Prof. Lews Lordwin___” Planned economy is a scheme of economic organisation in which individual and separate plants, enterprise of industries are treated as coordinated units of one single system for the purposes of utilising available resources to achieve the maximum satisfaction of the people’s need with in given time”.
Objectives of Economic Planning
The long-term objectives of economic planning are as follows:
1. Economic Development: The main objective of Indian planning is to achieve the goal of economic development economic development is necessary for under developed countries because they can solve the problems of general poverty, unemployment and backwardness through it.
Economic development is concerned with the increase in per capita income and causes behind this increase.
In order to calculate the economic development of a country, we should take into consideration not only increase in its total production capacity and consumption but also increase in its population. Economic development refers to the raising of the people from inhuman elements like poverty unemployment and ill heath etc.
2. Full Employment: Underdeveloped countries are suffering with a persistent problem of unemployment. The developing country like India is also facing the severe problem of unemployment. Hence, economic planning aims to attain full employment and eradicate unemployment from the economy.
3. Alleviating Three Main Bottlenecks: Economic planning also aims to improve three main bottlenecks of Indian economy, i.e., the level of agricultural production, capacity of manufacturing units and balanced of payment. These areas act as three pillars of economy through which economic development can be increased.
4. Economic Self Reliance: Self-reliance means ‘to standout independently’. In view of Five Year Plans, Indian intends to be self-sufficient in its national resources and powers rather than to remain dependent on foreign reserves. Initially, India has imported various foreign aid in form of advanced technology, natural resources and foreign investments for the economic development.
5. Social Justice: Social Justice refers to equitable distribution of income and wealth within a society. There should be no discrimination between rich and poor. All the citizens of the society should receive equal opportunities and privileges. Following are the four important aspects of social Justice:
- To apply democratic principles in the political structure of the nation.
- To ensure social and economic equality and eliminate regional imbalances.
- To remove centralization of economic power.
- To uplift weaker sections of the society.
6. Modernization of the Economy: Modernization refers to those institutional and structural changes in economic activities which would transform colonial and feudal country into an independent and progressive economy. This can be attained through an improved standard of living, application of advanced technology, encouraging R&D activities, increasing industrial outputs, expanding banking and non-banking institutions etc.
7. Economic Stability: It is very important to maintain the price level and structural balance in the economy. The control of inflation and unemployment brings in economic stability.