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A number of definitions have been forwarded by different economists from time to time since the term ‘planning’ entered the domain of economics. To make us develop a clear understanding of planning, we need to see only a few of them which will enable us to draw out a working definition that fits contemporary time.
A large number of economists and experts have agreed that perhaps the best definition is given by H. D. Dickinson, according to whom, economic planning is, “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.”
It was the National Planning Committee, set up in 1938 by the Indian National Congress which, for the first time, tried to define planning (in 1940, though, its final report was published in 1949) in India. It could be considered the broadest possible definition of planning: “Planning, under a democratic system, may be defined as the technical coordination, by disinterested experts of consumption, production, investment, trade, and income distribution, in accordance with social objectives set by bodies representative of the nation. Such planning is not only to be considered from the point of view of economics, and raising of the standard of living, but must include cultural and spiritual values, and the human side of life.”1
By the late 1930s, there was an almost political consensus that independent India will be a planned economy. As India commenced economic planning by the early 1950s, the planning commission of India also went on to define planning. According to the Planning Commission, “Planning involves the acceptance of a clearly defined system of objectives in terms of which to
frame overall policies. It also involves the formation of a strategy for promoting the realisation of ends defined. Planning is essentially an attempt at working out a rational solution of problems, an attempt to coordinate means and ends; it is thus different from the traditional hit-and-miss methods by which reforms and reconstruction are often undertaken”.2
In the post-War period, a large number of the newly independent countries were attracted towards planning. Many new forces of change kept refining the very idea of planning due to the compulsive necessities of industrialisation or the issue of sustainability of the development process. But to carry forward our discussion, we need a working as well as a contemporary definition of planning. We may define it as a process of realising well-defined goals by optimum utilisation of the available resources.3 While doing economic planning the government sets developmental objectives and attempts to deliberately coordinate the economic decision making over a longer period to influence, direct and in some cases even to control the level and growth of a nation’s main economic variables (i.e., income, consumption, employment, saving, investment, exports, imports, etc.).4
An economic plan is simply a set of specific economic targets to be achieved in a given period of time with a stated strategy. Economic plans may be either comprehensive or partial. A comprehensive plan sets targets to cover all major aspects of the economy, while a partial plan may go for setting such targets for a part of the economy (i.e., agriculture, industry, public sector, etc.). Taken broadly, the planning process itself can be described as an exercise in which a government first chooses social objectives, then sets various targets (i.e., economic targets), and finally organises a framework for implementing, coordinating and monitoring the development plan.5
One very important thing which should be clear to all is that the idea of planning first emerged in its applied form and after studying and surveying the experiences of different countries which followed it, experts started theorising about planning. Thus, in the case of planning, the direction has been from practice to theory. This is why the form and the nature of planning kept changing from country to country and from time to time. As we will see
in the following pages, the types of planning itself evolved through time as different countries experimented with it.
As per our working definition, we may say the following things about planning:
(i) Planning is a process. It means planning is a process of doing something. Till we have some goals and objectives left regarding our lives, the process might continue. With the changing nature of our needs, the nature and scope of the planning process might undergo several changes. Planning is not an end in itself. As processes accelerate and decelerate, change direction and course, so also does planning.
(ii) Planning must have well-defined goals. After the Second World War, several countries went for development planning. As these nations had enormous socio-economic hurdles, they first set some goals and objectives and then started their process of realising them via planning. In due course of time, there emerged a consensus that planning must have some goals and those goals should be well-defined (not vaguely defined)—so that the government’s discretionary intervention in the economic organisation could be democratically transparent and justified. Even in the non-democratic nations (i.e., erstwhile USSR, Poland, China, etc.) the goals of planning were clearly defined.6
(iii) Optimum utilisation of the available resources. Here we see two catch concepts. First, is the way of utilising the resources. Till the idea of sustainability emerged (1987) experts tried to ‘maximise’ the resource exploitation. But once experts around the world introspected the untenability of such a method of resource utilisation, the sustainable approach was included into planning and here in entered the idea of utilising resources at its ‘possible best’, so that environmental degradation could be at its minimum and the future generations could also be able to continue with their progress. Second is the idea of the natural resources which are available. Resources (i.e., natural as well as human) could be of indigenous origin or exogenous. Most of the countries doing planning tried to utilise their indigenous resources, yet some tried to tap the exogenous resources too, taking leverage of their diplomatic acumen. For example, the first country going for national
planning, i.e., Soviet Union, leveraged resources available in the East European countries. India also used exogenous resources for her development planning wherever it was necessary and possible to tap.7
By the 1950s, planning had emerged as a method or tool of utilising resources to achieve any kind of goals for policymakers, around the world:
(i) Trying to achieve a particular size of family for different countries came to be known as family planning.
(ii) The process of providing suitable physical and social infrastructure for the erstwhile or the upcoming urban areas came to be known as town/urban planning.
(iii) A country trying to optimise the use of its revenues for different categories of expenditures came to be known as financial planning. Financial planning is more popularly known as budgeting. Every budget, be it of the government or of the private sector is nothing but an excercises in financial planning.
(iv) Similarly, at the macro and micro levels, there might be any number of planning processes—agricultural planning, industrial planning, irrigation planning, road planning, house planning, etc.
Simply said, the art of achieving any kind of goal by the use of the resources we have is the process of planning. We may cite a very general example—students of a class are able to join the class at the right time coming from different places of their stay. How they are able to do so? All of them must be planning their time in such a way that they are able to join the class at the same time though their places of residence are not at an equal distance from the class. All might be having their own ways of time planning
—some might be having bed-tea, some might not, some might be having breakfast at their place, yet others might think to take their breakfast in the college canteen, etc.
It means that even if we are not consciously planning or have not announced it as yet, we are always planning our days. Same is correct in the case of countries. Many countries announced that they will be planned economies, yet some others didn’t go for any such policy announcements. The soviet Union, Poland, China, France, India are examples of the former
category while the USA, Canada, Mexico fall in the latter category.8 But here we are concerned with the conscious process of planning. There will be some methods, some tools and types of planning emerging through time as different countries will start their processes of planning.