Concept of Economic Planning:
There was no concept of economic planning before the Twentieth century all around the world. The idea of economic planning goes back to 1910 when a Norwegian economist Professor Kristian introduces the idea of economic development. In 1928 the Soviet Union introduced the idea of economic planning. It formulated its first five-year plan with a view to achieving the rapid transformation of a backward agricultural state into a modern industrial power in 1928.
It was strongly opposed by the developed western countries and the capitalist world. The importance of economic planning was realized by the politicians and economists after the great depression of the 1930s and Keynes’ writing and later on the second world war drew attention to the words of plans for rehabilitation and securing rapid growth within a short time. Now in all countries of the world, economic planning is regarded as a guide to the development of social sectors of an economy.
Not only this, but it also serves to achieve a fair distribution of wealth along with the rapid growth of an economy. The socialist countries produce and distribute national wealth through a central planning authority, whereas planning is introduced in capitalist economies in a different way. In these economies planning for the public sector is limited It is mainly state-guided, market directed, and largely for a private enterprise economy.
Definition of Economic Planning:
There is no precise definition of economic planning which is acceptable to all economists and political thinkers. The idea under-lying planning is a conscious and deliberate use of resources of a community with a view to achieving certain targets of production for the overall development of the economy. As the targets of production and development are different in different economies, so the definition of economic planning is different for all economists.
Some comprehensive and well-admitted definitions presented by various economists are given below to understand the meaning of economic planning.
According to Zoweig:
“Economic planning consists of the extension of the function of public authorities to organization and utilization of economic resources”.
Prof. H.D. Dickinson defines economic planning as
“The making of major economic decisions, what and how much is to be produced and to whom it is to be allocated by the conscious decision of a determinate authority, on the basis of a comprehensive survey of the economic system as a whole”.
The type of planning suggested by Dickinson is hardly practiced in any capitalist country of the world.
Prof. Lewis Lorwin defines economic planning as,
“A scheme of economic organization in which individuals and separate plants, enterprises, and industries are treated as coordinated units of one single system for the purpose of utilizing all available resources, to achieve maximum satisfaction of the people’s need within a given time.”
This type of planning is practicable only in socialist countries.
According to Prof. Arthur Lewis, a development plan may contain any or all of the
- A list of proposed public expenditures.
- A survey of current economic conditions.
- A discussion of likely development in the private sector.
- A mean of economic projection of the economy.
- A review of government policies.
Prof. Robbins says,
“To plan is to act with the purpose of choose and choice, is the essence of economic activity. ” Further he says, “Planning in the modern jargon involves government control of production in some form or the other.”
This definition is not acceptable as a workable definition.
Mrs. Barbara Wootton defines economic planning as,
“The conscious and deliberate choice of economic priorities by some public authority.”
According to the Planning Commission of India, economic planning is,
“Essentially a way of organizing and utilizing resources to maximum advantage in terms of defined social ends. The two main constituents of the concept of planning are (1) A system of ends to be pursued and (2) Knowledge of the available resources and their optimum allocation.
According to, the Planning Commission of Pakistan, economic planning is “The formulation of programs and policies designed to lead by a consciously directed and accelerated movement from a largely technologically backward and feudalistic stage into the modem area of advanced technology.
It is obvious from the definitions given above that all plans aim at utilizing more effectively the potential resources available to a community with a view to achieving the defined objectives within a given time period.
Keeping in view the above discussion we can say that economic planning is:
- Formulation of objectives and targets.
- Deliberate control and direction of the economy.
- Fixing targets to be achieved by priorities of production for each sector of the economy.
- Mobilization of the financial and other resources required for the execution of the plan.
- Creating assessment machinery for assessing the progress made.
- Creation of the necessary organization or agency for the execution of the plan.