This is a sample essay on “the role of planning in Indian Economy.” Planning has undoubtedly promoted development in many countries. But post-war history reveals that there have been many more failures than successes in carrying out development plans.
6 Important points to remember:
- Essay Introduction
- Meaning of Planning
- Incentive vs. Control
- Objectives of Indian Planning
- Public and Private Sectors
- Public Participation
Essay Introduction:
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Planning has undoubtedly promoted development in many countries. But post-war history reveals that there have been many more failures than successes in carrying out development plans. Indeed, among developing nations with some kind of market economy and a sizeable private sector, only one or two countries seem to have been consistently successful in carrying out plans.
Except for short periods, most countries have failed to realize even modest income and other targets. What is even more disturbing that the situation seems to be worsening instead of improving. In Asia where countries had greater experience than those in other regions the rates of growth have varied a great deal. The situation is not very different in other countries.
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Meaning of Planning:
A development plan, however, is not the same as development planning. Planning as a process involves the application of rational system of choices among feasible courses of investment and other development possibilities based on a consideration of economic and social costs and benefits. These may be or may not be put into a written ‘plan’. Those who equate a development plan with development planning are many.
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A plan can play an important part in the planning process when it makes explicit the basis for planning policies and measures. But if a plan is prepared before the process has begun in earnest or is unable itself to generate the process, it is likely to have little significance for development.
Incentive vs. Control:
The evidence teaches that the best long-run method of getting people to act in such a way as to achieve plan objectives is to make it profitable for them. Where governments have replaced administrative controls by economic incentives, the result has usually accelerated economic activity. In Pakistan, for example, government officials agree that administrative restraints hampered industrial growth during the First Plan Period.
Since the early 1940’s when Yugoslavia replaced centralized control based on the Soviet model with decentralized management of the economy that has evolved a system of economic incentive based on tax, credit and price policies. These incentives did so much to raise production that other eastern European countries were attracted towards the Yugoslavia system.
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In contrast, in many countries the governments with mixed economies rely on direct controls and administrative intervention in the private sector in preference to incentives, and often depress their economies as a result. The problem now is how to get the mixed economy countries to readopt the system of economic incentive that the socialized countries seem to be taking over from them.
India’s development process is a significant and novel economic experiment of introducing growth into a static economy, within the framework of democratic institutions. It is the first and the only non-violent experiment in Asia which seeks the transition of backward economy into self-sustaining status through constitutional procedures and not through force. As such, India’s development process is of worldwide interest.
The object of economic planning in India primarily rests on the desire to improve the level of living of her people and her relative economic status in the world. I n other words, the aim is to raise the national real income in such a manner that continuing growth becomes self-sustaining.
Objectives of Indian Planning:
The broad objectives of India’s planning are derived from ” The Directive Principles of the State Policy” set forth in the Constitution. According to the “Directive Principles “, the public sector will have to assume responsibility for action to generate progress and social (as against private) gain. In the first few years of planning the idea of a ‘socialist pattern of society’ was formulated.
In the scheme of India’s planned development, the public and private sectors were viewed as complementary. The private sector included not only organized industry, but also agriculture, small-scale industry, trade and great part of activities included in the private initiative were regarded as necessary and desirable, the aim of policy being to assist development on the basis of voluntary co-operation to the utmost feasibility.
Public and Private Sectors:
For large-scale industrial enterprises in the public or private sector, an Industrial Policy Resolution was adopted by the government in 1948. Eight years later, i.e. in 1956, a New Industrial Policy Resolution was formulated, and that continues to hold the field.
According to the new Resolution, which seeks to translate the concept of the socialist pattern of society into concrete terms, industries are divided into three categories—The first category consists of those industries whose future development is intended, broadly, to be exclusive responsibility of the state. Expansion of existing private owned units becomes, the responsibility of the State. The possibility of securing co-operation of private enterprise in the establishment of new units by the state is also envisaged.
In the second category, the state may generally take die initiative in establishing new industries, but private enterprise is expected to supplement the effort of the State. The third category will in general be left to the initiative and enterprise of the private sector. Under this scheme, the public and the private sectors have grown from one plan to another, and the ability of each to supplement activities in the other has also steadily increased.
Public Participation:
Voluntary effort and public participation have been important factors in India’s Planning. As stated in the First Plan the way any programme is conceived, offered and carried out, action by the agencies of the Government must be inspired by and understanding role for the people and supported by practical steps to enlist their enthusiastic participation’.
In each Plan considerable, encouragement has been given to voluntary organizations, and an attempt is made to consolidate their efforts through the National Advisory Committee for public co-operation in the formulation for each plan. At the local state and national level, efforts are made to enlist public co-operation and criticism and constructive suggestions are sought from all quarters.