WHY PLANNING

For the possible remedies of the country's economic stagnation, poverty and backwardness; state has to play a key role in economic and social spheres. Planning is the instrument to carry out these duties. It is the systematic and scientific utilization of available resources to achieve national goals.

OBJECTIVE OF PLNNING

While the short-term objectives varied from plan to plan, the long-term objectives of Indian planning are based on the principle of high growth rate, social justice and economic self-reliance.

STRATEGY OF INDIAN PLANNING

The strategy for Indian Planning is based on the principles of comprehensiveness, balanced development and accelerated growth to be achieved through the instrument of mixed economy. The 1990 crisis, however, brought some major changes in our strategy. Year 1991 was the watershed in the history of Indian planning. The key components of strategy of planning in India included-

Comprehensive developmental planning: It included policies for economic development as well as for institutional change and cultural progress. The task was not merely to get better results within the existing framework of economic and social institutions, but also to remould and refashion these institutions so that they contribute to the realization of wider and deeper social values.

Mixed Economy: Based on the coexistence of government owned business enterprise with private enterprise. The Private Sector was expected to observe national priorities in development, and pay attention to not only private gain but also public good.

Priority development of Public Sector: Because of strategic importance, non-profitability and high capital intensiveness of certain areas of social and economic significance, private sector was not expected to play a leading role. Idea was to let the public sector occupy commanding heights of the economy and bring the private sector effectively within the scope of planned development.

Accelerated growth: Equitable distribution of resources, by itself, couldn't ensure a reasonable standard of living for masses. Thus an accelerated tempo of development was sought after as a development strategy.

Balanced development: Inter-Sectoral, Inter-regional and equitable development of all classes and all sections viz. women and children, was the focus of strategy through plans. While agriculture, industry and services got a renewed thrust, attention was also paid to the development of backward regions.

Emphasis on Employment: For a person without other sources of income, right to work is in fact, the right to life. Realizing this, the plan professed great concern for further employment to utilize country's vast manpower resources and promote national development and an equitable society.

The 1990 crisis brought a paradigm shift in our strategy, from a closed to open system, and from independence to greater inter-dependence (Rao-Manmohan Model). The major components of the model included -

Liberalization of economy: It freed the economy from major physical controls like industrial licensing, import restrictions and foreign exchange controls besides restrictions on investments etc, so that development and operation of economy is guided increasingly by free market forces i.e. by prices and competition. Synergies of both the public and private sector was to be realized in new strategy.

Abandonment of the policy of priority development of Public Sector: pre-liberalization period saw over-dependence on the public sector. Majority of the budgetary allocations were meant for this sector which had become increasingly inefficient and non-performer. Liberalization put an equal emphasis on both the public and private sectors.

Opened door to foreign private investment: Removed most of the restrictions. A more vibrant role of the private sector was recognized. Nevertheless the government has not formally given up the objective of self-reliance looking at the shear size of the country and welfare concerns.

Integration of economy which world economy: The protectionist strategy gave way to competitive policies with gradual integration with world economy. Removal of Quantative Restrictions, partial convertibility of rupee and flow of capital has been increasingly allowed.