Planning Role of Government
Planning role of government involves the setting objectives for development and defining ways and means to achieve these objectives. It involves knowing and directing the available resources in the right direction.
In a developing economy like India, planning is important to ensure that the available resources are channelized in right direction and optimally utilized to generate to desired output. Planning is also important as there is gap between stated objectives and their achievement.
Planning helps in defining priorities as resources available with any country are limited. In India, National Planning Committee was set-up in 1938 by Indian National Congress, with an objective to draft plan for development of the country. The committee chaired by Jawahar Lal Nehru, worked on various aspects of economic planning. In 1950, Planning Commission of India was set-up by the Government of India.
The commission was entrusted the task of assessment of country’s resources (human, natural and physical) and formulate a plan for optimal use of these resources for overall socio-economic development of the country.
The long-term goals of planning commission were:
- To increase and optimize production level to maximum, to increase national and per capita income.
- Encourage industrialization with emphasis on core and heavy industries to attain self-reliance.
- Attainment of full employment.
- Reduce socio-economic and income inequalities.
- Establish socialistic system based on social justice, equality and absence of exploitation.
Planning is universal in nature and taken up by all enterprises and governments. From economic point of view, government planning is planning taken at macro (country) level, forming an outer framework within which enterprises plan their operations and activities.
Types of Planning on the basis of extend/scope of planning.
Comprehensive: Comprehensive planning involves planning a series of activities with stated objectives for achievement within a set time frame, For example, five years plans state the objectives to achieve with a period of five years.
Piecemeal: It is ad-hoc planning for meeting contingency situation or planning for certain objective at a give time. For example, 20 point economic program, society security plans, after war-reconstruction plan etc are examples of piecemeal planning.
On the Basis of Time Horizon
- Short-term: Planned activities over a short period of time (less than five years).
- Long-term: Planned activities for a longer period of time (more than five years).
On the Basis of Control (organizational dimensions)
- Centralized: The planning is taken up by Centre and passed on to state and further down at regional and. district level, Actual execution takes place at the lower levels.
- Decentralized: This type of planning starts from a lower level and is extended for support and execution to higher level.
Planning must be optimal and balanced in economic and social terms. Important aspects and steps in planning:
Planning involves intervention with free market operations.
It gives an insight in the political ideology.
Priorities are set within the broad framework of planning.
Once objectives are stated, it is necessary to set physical targets for different sectors.
The implementation strategies and policy mix for achievement of targets are specifically defined. The policy mix gives an outline of various economic policies including fiscal, monetary, economic, industrial policies: These policies give an operational dimension to targets and Objectives.
The methods of execution (implementation) are planned. Faulty implementation often leads to failure of planning.
Planning must be periodically appraised and reviewed. It ensures corrective measures are taken at the right time to ensure effectiveness of the plan.
Goal of planning must in ‘socio-economic’ terms, for example, economic growth, economic development, social justice, full employment, stability, ecological balance etc.