Economic planning is “a process which determines the path of economic progress. Among the many priorities and necessities government has to make a choice of path among alternatives and available resources for development. The choice of path for development involves planning process. Planning is a continuous process which involves decision, or choices, about alternative ways of using available resources, with the aim of achieving particular goals at some time in future.”
The planning is organised and directed by a central authority like the state possessing the power of implementation.
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Planning involves following processes:
(a) Survey and diagnosing the current economic situation
(b) Framing of a policy, philosophy and a framework for implementation
(c) Defining a set of objectives which should be achieved and fixing some strategies therein
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(d) A macro-economic projection of different variables of the whole economy.
Economic planning in India started from 1951. Planning in a mixed economy is very difficult task. It has to carry the stress and strains of both private capitalism as well as socialist priorities of a welfare state. Economic planning cannot be merely indicative like a market economy nor can it be imperative type like a socialist economy.
In the absence of state control over means of production planning also has to see that concentration of economic power does not take place. State has to make a judicious blend of direct and indirect controls. It can neither be rigid nor too flexible. Planning in India has to operate through these two lines of action.
Planning is implemented by planning commission. The major objective of economic planning in India is achieving an increase in GDP, GNP. The growth was sought to be made self-sustaining in nature. However, the growth rode was for a long time about 2.5 percent per annum, but after eighties assumed around more than 5 percent for annum. Government’s role as a planner made a tremendous headway in terms of economic growth.
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When India got independence she inherited a crippled agriculture, destruction of traditional industries, very limited number of modern industry, dire poverty. Government of India through its planning process has changed the face of the economy to a large extent. The public sector has contributed significantly toward the cause of industrialisation. Private sector also got an opportunity to growth. There has been a gradual reduction of people below poverty line.
After 1991 the government of India changed the course of planning in consonance with renewed global interest on market economy. Private sector got a higher importance in the planning process. Public sector has got a limited role to play in the revised phase.
But the nature of mixed economy and the planning process has still an active role to play. Now the Tenth Five Year Plan is in progress (2000-07). The planning though is now more indicative in nature thus the mixed economy structure has remained unaltered even in revised phase of the economy.
Private sector account for around 73 percent of total national output. In industrial sector private sector contributes about 70 percent of total value added generation. This growth and performance of private sector has been possible for a democratic role of the government in its planning process which is a natural and true feature of mixed economy.
Thus, role of Government as a planner in India has been proactive as well as neutral. Ideally in a mixed economy government should not act in a manner which will have a reflection of bias and nepotism.
Government of India has not acted in a biased manner in the promotion of public sector and has made the situation possible for the growth of private sector. Though there has been regulation and control over the growth of private sector so that private sector does not indulge in unfair and monopolistic trade practices.