Types of Economic Planning in India

Types of Economic Planning in India

In this post, we will discuss Types of Economic Planning in India with focus on Indian Economy. 

Types of Economic Planning in India
Types of Economic Planning in India


Economic Planning in India

Economic planning is the process of creating a long-term vision and strategy for the country's economic development. Economic planning in India started in 1951 with the adoption of the First Five-Year Plan, which was designed to promote economic growth, reduce poverty and unemployment, and improve the standard of living of the people. The main objective of economic planning in India is to achieve balanced and sustainable economic growth that benefits all sections of society.

Types of Economic Planning in India

There are different types of economic planning in India, which can be classified according to various criteria, such as the level of authority, the mode of intervention, the nature of resources, and the time horizon. In this blog post, we will discuss some of the major types of economic planning in India and their features, advantages, and disadvantages.


Planning by Direction and Planning by Inducement

1. Planning by direction is a type of planning where the government controls and directs the allocation of resources and the production of goods and services. This type of planning is usually associated with a socialist or a command economy, where the state owns and operates the means of production and distribution. Planning by direction aims to achieve social welfare, economic equality, and national security.

2. Planning by inducement, on the other hand, is a type of planning where the government influences and guides the allocation of resources and the production of goods and services. This type of planning is usually associated with a capitalist or a market economy, where the private sector owns and operates the means of production and distribution. Planning by inducement aims to achieve economic efficiency, innovation, and competition.


Financial Planning and Physical Planning

1. Financial planning is a type of planning that focuses on the allocation of financial resources, such as money, credit, and foreign exchange. Financial planning is essential to maintain a supply-demand balance and regulate inflation in order to achieve economic stability in the country. Financial planning involves the formulation and implementation of monetary and fiscal policies, such as interest rates, taxes, subsidies, and public expenditure.

2. Physical planning is a type of planning that focuses on the allocation of physical resources, such as labor, capital, and raw materials. Physical planning is essential to ensure that bottleneck situations are avoided during the execution of the plan. Physical planning involves the estimation and projection of the available and required resources for various sectors and regions of the economy.


Imperative Planning and Indicative Planning

1. Imperative planning is a type of planning where the government sets the mandatory targets and objectives for the economy and enforces them through legal and administrative measures. This type of planning is based on the principle of coercion, where the state has the ultimate authority and power over the economic activities. Imperative planning is often used in times of crisis, war, or emergency.

2. Indicative planning is a type of planning where the government sets the desired targets and objectives for the economy and encourages them through incentives and persuasion. This type of planning is based on the principle of cooperation, where the state and the market work together to achieve the economic goals. Indicative planning is often used in times of normalcy, peace, or stability.


Centralized Planning and Decentralized Planning

1. Centralized planning is a type of planning where the government at the national level makes the major decisions and plans for the economy. This type of planning is based on the principle of uniformity, where the same policies and programs are applied to the whole country. Centralized planning is suitable for a large and diverse country like India, where there are many regional and local variations and disparities.

2. Decentralized planning is a type of planning where the government at the sub-national level, such as states, districts, and local bodies, makes the decisions and plans for the economy. This type of planning is based on the principle of diversity, where different policies and programs are tailored to the specific needs and conditions of each region and locality. Decentralized planning is important for a democratic and participatory country like India, where there are many stakeholders and interests involved in the planning process.


Rolling Planning and Fixed Planning

1. Rolling planning is a type of planning where the government revises and updates the plan periodically, usually every year, to incorporate the changes and feedback from the previous plan. This type of planning is based on the principle of flexibility, where the plan is adaptable and responsive to the changing economic environment and circumstances. Rolling planning is useful for a dynamic and uncertain country like India, where there are many external and internal factors affecting the economy.

2. Fixed planning is a type of planning where the government sets the plan for a fixed period of time, usually five years, and sticks to it throughout the plan period. This type of planning is based on the principle of stability, where the plan is consistent and predictable for the economic agents and actors. Fixed planning is beneficial for a stable and certain country like India, where there are long-term and strategic goals to be achieved.



Athar Maqsood

Woking as an Author and Writer since 2020.
Education :
Bachelor in Political Science and Economics. Diploma in Computer Science, Tally, and Typing.

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