Economic planning is a resource allocation system based on a figure procedure for saving one compelled maximization problem, including iterative averages for getting its solution. Planning is a device for the allocation of resources between and within policies contrasted with the market mechanism.
Economic planning has been selected in different parts of the world for various missions. In socialist countries, where there are state-owned means of production, preparation has become an institutional need while in capitalistic countries wherever private ownership exists. It is necessitated as that use of resources.
In less developed countries or occurring countries, it is favored to overcome the bottleneck and about the bringing all-round reform.
After “organization depression,” economic planning has displayed love in underdeveloped countries of the world.
Most Dependable Economic Planning Systems: Goof Plan
1. Definite Objective
The several significant characteristics of economic planning are that it should possess a sure objective. Planning means deliberate and conscious movement as a definite objective. For instance, economic preparation is the objective to accelerate the comparison of growth, eliminate trade cycles, bring stability, and attain full employment in the marketplace.
2. Central Planning Authority
The existence of a necessary planning authority is another feature of economic preparation. This central planning authority is responsible for preparing different plans for development and coordinating the various exercises. The necessary preparation authority takes all decisions relating to production and consumption in an economy.
3. Democratic Character
Another pioneering feature is its democratic nature. No doubt, various plans are prepared by experts, but in the same season, adequate chances are provided to the people to actively participate at various levels. Being the federal structure of the Indian constitution, the Union Government uses its fiscal, monetary, and physical controls to guide and give direction in consequence with the five-year plans.
4. Only An Advisory Role of the Planning Commission
In the decentralized set up of planning. The planning commission is the apex physique. It provides the necessary perspective, guidance, and coordination. Besides, that serves as a close link between different agencies so that functioning may be smooth. In this regard, the preparation commission is an advisory actor.
Another important characteristic of planning is its comprehensiveness in scope. As central planning authority takes all decisions concerning production, consumption, and distribution, this obligation covers the entire economy which must be complete in scope. In other words, planning needs to be sufficient so that the planning of one sector may not be nullified by the absence of planning on other sectors.
6. Planning For Consumption
In a centrally planned economy, it should be confined to production alone, but at the same time, it must cover the distribution and consumption more. In other words, the planning authority should not decide what and how to produce, but it must in mind and decide accordingly, among whom it is to be distributed.
7. Rational Allocation of Resources
Generally, in under-developed countries, available resources are sure, and this resource is allocated in such a manner as to get maximum social welfare, it needs to fix up priorities relating to economic development, thus, allocation of resources following these fixed priorities. These scarce resources are also allocated to eliminate wastage for maximization of social-welfare, coordinating inner-sector and international plans into a single unified unit, which, in turn, promotes economic development in an economy.
Economic preparation has practically become its crucial importance in the concept of money. Economic Planning System helps to make a budget and avoid wastage plus promote addition as the necessary time to come.