Economic planning implies the setting of certain targets which are tried to be achieved within a planned period. The targets are to be accomplished through various measures. Strategy of planning implies the selection of measures and methods out of various alternatives to achieve the targets.
Strategy of planning is not to be the same for all countries, due to different political systems and periodical requirements for economic development. The following elements are taken into consideration by the planners before deciding the strategy of planning.
Determination of the overall growth rate occupies a central position in the strategy of economic planning. The problem is to make a decision regarding rates of growth in different sectors of the economy so as to determine the over all growth rate of G.N.P.
A decision has to be made on the proportion of investment between the public sector and the private sector. If the share of the private sector is low, the public sector has to make greater investment.
In the strategy of an economic plan, the targets of average and marginal savings as a proportion of G.N.P. are clearly laid down. In order to exploit saving potential of the nation, measures are also suggested to raise domestic savings both in the private and public sectors.
Balance of Payment:
The increase in export earnings and the production of import substitutes are vital to economic growth. The steps to increase the rate of exports and production of capital goods a home are clearly worked out and mentioned in the plan.
The planners have to take a decision to reduce economic disparity between different regions of the country. In this connection they suggest measures to accelerate the rate of growth in backward and underdeveloped regions. It is also clearly mentioned by how much proportion the disparity will be reduced in the plan period.
The strategy of å plan includes measures to be adopted to increase the level of employment in the economy. This is rather a key decision to be taken.
The problem of allocation of resources among different sectors of the economy is solved by the planning authority. The priority in the allocation of resources is given to those sectors which are vital to economic growth.
Period of the Plan:
The period should be long enough to give time executing the projects of the plan and achieving desired targets. The most common period is five years which was made popular by the Five Year Plans of the U.S:S.R. The plan period may be longer or short, but five year period is the most satisfactory period.