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Aims and Objectives of Economic Planning

Planning is regarded as a solution for all economic ills. It is therefore, advocated for the achievement of a variety of objectives. The objectives are not the same for all the countries not for all times. The objectives depend on the stage of economic development, socio-economic conditions and requirements of particular situations.

A planning authority makes an assessment of the variable domestic and external resources and keeping in view the resource constraint, determines the objectives and targets of a plan with a duration of five years.

An underdeveloped economy cannot depend upon single objective planning but aims at multi-objective planning. The objectives should be realistic, interrelated and complementary.

According to Prof. Chamberlin

“Planning starts with purpose until objectives are defined, there can be no sense of direction, no standard of measuring the adequacy of effects or acceptability of results. But the planning objectives differ from country to country, and they may change in the same country as it gradually begins to achieve higher growth rates consequent upon rapid industrialization”.

The following are the major objectives which are generally achieved through planning.

Increase in National Income:

LDCs are facing problems of low national income generates number of other economic and social problems. In underdeveloped countries, planning is aimed at maximization of National Income. Thus, the most important objective of sound economic planning is to raise national income in LDCs. In LDCs national income is very low as compared to other developed nations of the world. Therefore, each development plan aimed to raise N.I. Only a concentrated and planned effort can raise national income. So, a better living standard can be achieved only by increasing national income.

Increase in per Capita Income:

The target of an increase in per capita income can be achieved through proper planning. If the growth of population is controlled and there is an increase in national income, then per capita income will increase.

Achievement of Full Employment:

In economically developed countries, the aim and main objective of the state is to provide full employment. While in underdeveloped countries the main objective of planning is to create employment opportunities by proper allocation of resources and reduction in unemployment. The following were the objectives of creating jobs during the five-year plans and periods.

Maintaining the full employment level without creating inflation or deflation in the country is the most important objective of development planning in LDCs. But in development planning to achieve full employment level without inflation and deflation is quite difficult due to number of factors. Therefore, the aim of planning is to expand employment opportunities. Targets are to create new jobs.

Rapid Industrialization:

Rapid industrialization is a desirable aim for the planners of underdeveloped countries because agriculturally predominant economies are bound to remain backward. It is industrialization that makes a more significant contribution in raising the national income and increases the chances of employment.

Reduction of Inequalities:

In under-developed countries inequalities of income, wealth and opportunities have widened, masses are on the border line of starvation and few rich people and families are rolling in all the conceivable luxuries. The plans of all the developing countries aim at reducing inequalities of any type. By the 1st five-year plan of Pakistan, the economic and social objectives of government policy became well known. They are “to develop the resources of the country as rapidly as possible so as to promote the welfare of the people, provide better living standard and social services, secure social justice and equality of opportunity and aim at the widest and most equitable distribution of income and property.”

Self Sufficiency in Food and Raw Materials:

Most of the developing economies are facing the problems of food shortage. To meet the food requirement government, have to spend foreign exchange on the imports of food products. To overcome this problem by increasing the efficiency and productivity of agriculture sector is one of the primary objectives of development planning.

For the preparation of a more systematic and intensive planning in most of the developing countries of the world, priority is being given to increase domestic food and raw material production which should provide a solid and sound base, for the economy. The objective of planning is to keep the food output growing faster than its population so that there should be an end to hunger and malnutrition.

Minimizing Regional Economic Disparities:

Gap between the rich and the poor on the basis of power resources or economic position is one of the main characteristics of LDCS. This gap creates a heart burning among the people of backward areas. These disparities also create hurdles in the way of growth and development process. Thus, planning authorities should keep in mind this main objective to remove these disparities with the consultation of representatives of respective areas while formulating the economic plan. The planners therefore draw up plans by consulting Representatives of the various regions and try to seek cooperation, support and participation of the people.

Redressing Balancing in the Economy:

Economic planning in underdeveloped economies aims at reducing imbalances in the economy. If only one selected sector is chosen for development and the other sector, say, industry is neglected, a country will not achieve the highest level of growth. So, planners in underdeveloped countries must pay attention to the various important sectors simultaneously. Hence, only a sound plan can reduce disproportions in the economy. Provisions of social services considered as an important objective of planning in LDCS.

Provision of Social Services:

In less developed countries the provision of social services forms an important objective of planning. Provision of social services such as schooling, health and facilities of clean water in rural areas and like drainage, housing and transport in urban areas. Development of rural areas through various programmes and policies along with wide spread extension of social services such as schooling, health and drinking water facilities. Easing of urban problems like water supply, drainage, housing and transport problems.

Long Term Economic Growth:

Long-term economic growth is also an important objective of the economic planning. The objective of planning can be achieved by mobilizing resources for development purposes through self-help basis and a decentralized administrative set up which provides the foundation for long term economic growth. Investment in basic engineering industries and increasing agricultural and industrial production through scientific and technological research can go a long way to stabilize the economy. Discovery of natural resources, human development programs, encouragement of savings and investment should be the targets of planning authorities. Mass media should play their role for achieving these goals.

Wider Outlook:

The planners in the developing countries are giving more attention to improve the quality of education, Therefore, the outlay for the education sector is increasing in the plans. Women participation in development is also being encouraged.

Price Stability:

LDCS face problem of price instabilities due to rapid increase in demand and artificial shortage by producers to raise their profits. As a result, the prices start rising very sharply. Therefore, it becomes the basic responsibility of government to take effective steps to overcome these problems by formulating sound economic planning.

To Overcome BOP Difficulties:

LDCS mostly depends on agriculture sector, accordingly major share in exports also depends upon primary goods which is not highly demanded in world market. Low demand for these primary goods reduces prices in the world market.

Again, to meet the domestic requirements, they have to depend on imports for capital goods and manufacture goods etc. Heavy payments have to make against such imports which creates the problems of adverse BOP in LDCs. To overcome such problems of BOP, economic planning is strictly advocated.

Increase is Saving:

People in LDCS are not well aware about the role of saving in economic growth and development. They mostly spend their savings consumption expenditures such as fairs, marriages, festivals etc. On the other hand, due to low per-capita income saving capacity is also very low in LDCS.

Due to all these factors volume of the saving is LDCs remains very low which ads to low capital formation and poor living standards of the people in the country. So, Planning authorities should focus on this objective while formulating economic plans.

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