In this article we will discuss about the economic planning in India. Learn about:- 1. Meaning and Features of Economic Planning 2. Definitions of Economic Planning 3. Essentials of Planning 4. Nature of Economic Planning 5. Types of Plans 6. Objectives of Indian Planning 7. Importance of Planning 8. Need for Planning 9. Size of the Plan 10. Formation of Various Plans 11. Stages of Five Year Plan 12. Role of Government in Plan Formulation 13. Recommendations of ARC 14. Execution of the Plan.
Audience: General, Students, Teachers and UPSC Aspirants.
Economic Planning in India: Meaning, Features, Objectives, Types and Importance
India’s commitment to planned economic development is a reflection of our society’s determination to improve the economic conditions of our people and an affirmation of the role of the government in bringing about the growth performance through a variety of social, economic and institutional means. The ultimate objective of the Indian planning is to achieve broad based improvement in the living standard of society at large. Rapid growth is essential for expanding incomes and employment. It provides the required resources to finance programmes of social uplift.
Economic Planning in India – Meaning and Features
The term ‘economic planning’ has been used very loosely in economic literature. Therefore the term has been often confused with communism, socialism or economic development. Economists are not unanimous with regard to the term ‘economic planning’. Despite the aforesaid situation, efforts have been made to explain the term in precise words.
Economic planning is the making of major economic decision, 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.
Professor Lewis has referred to six different sense in which the term economic planning is used in economic literature. “First, there is an enormous literature in which it refers only to the geographical zoning of factors, residential buildings, cinemas and the like. Sometimes this is called town and country planning and sometimes just planning. Secondly, ‘planning’ means only deciding what money the government will spend in the future, if it has the money to spend.
Thirdly, a ‘planned economy’ is one in which each production unit (or firm) uses only the resources of men, materials and equipment allocated to it by quota and disposes of its product exclusively to persons or firms indicated to it by central order. Fourthly, ‘planning’ sometimes means any setting of production targets by the government, whether for private or public enterprise.
Most governments practice this type of planning if only sporadically, and if only for one or two industries or services to which they attach special importance. Fifthly, here targets are set for the economy as a whole, purporting to allocate all the country’s labour, foreign exchange, raw materials and other resources between the various branches of the economy.
And, finally, the word ‘planning’ is sometimes used to describe the means which the government uses to try to enforce upon private enterprise the targets which have been previously determined.”
Major features of economic planning are as follows:
(i) It is concerned with survey and diagnosis of the present economic scenario.
(ii) It defines policy and objectives to be achieved in future.
(iii) It presents a macroeconomic projection for the whole economy.
(iv) It formulates strategies through which objectives are to be achieved.
(v) It guides and directs the economy along with the path of growth and development.
(vi) It creates productive capacity in the country.
Economic Planning in India- Definitions of Economic Planning
Some of the definitions of economic planning are:
Professor Robbins defines economic planning as “collective control or supervision of private activities of production and exchange.”
To Hayek, planning means, “the direction of productive activity by a central authority”.
According to Dr. Dalton, “Economic planning in the widest sense is the deliberate direction by person’s in charge of large resources of economic activity towards chosen ends.”
Lewis Lordwin defined economic planning “as a scheme of economic organisation in which individual and separate plants, enterprises, and industries are treated as coordinate units of one single system for the purpose of utilising available resources to achieve the maximum satisfaction of the people’s needs within a given time.”
In the words of Zweig, “Economic planning consists in the extension of the functions of public authorities to organisation and utilisation of economic resources. . . . Planning implies and leads to centralisation of the national economy.”
According to Dickinson who defines planning as “the making of major economic decisions-what and how much is to be produced, how, when and where it is to be produced, to whom it is to be allocated, by the conscious decision of a determinate authority, on the basis of comprehensive survey of the economic system as a whole.”
Economic Planning in India – Essentials of Economic Planning
In order that economic planning might be successful, certain essential conditions are to be fulfilled.
These conditions are:
i. Well-Defined Aims and Objectives:
Every plan must be associated with certain well defined aims and objectives. In democratic planning there must be a large measure of agreement in the community with regard to these aims and objectives.
ii. Emerge Out of the Conscious Decisions:
Planning must emerge out of the conscious decision of a determinate authority.
iii. Purposive Direction:
In a federal structure, where there is the diffusion of power and responsibility, there must be an overall unity of policy. The purposive direction, which planning involves, must come from the Central Government.
iv. Carefully Fix the Targets:
The planning authority must carefully fix the targets without illusions as to what is possible. If the targets are fanciful, the whole plan will be fanciful. And this is as true whether the targets are too large or too small. Planners, who promise more than they can perform, throw everything out of gear, so that the economy might use as well not be planned at all. Over-fulfilment is just as much a sign of bad planning as is under-fulfilment.
v. Flexibility:
There should be some measure of flexibility in planning, which means that the plans can be revised and rephrased if circumstances demand it.
vi. Appropriate Duration:
Planning very far ahead is not desirable. A general five-year plan for the whole economy is no more than a game, because it is not possible to foresee what will happen to productivity in five years.
vii. Scrupulously Earnest and Determined:
Once the targets are carefully fixed, the government must be scrupulously earnest and determined to achieve the targets.
viii. Adoption of Judicious Price Policy:
In order that the objectives and targets, laid down in the plan, might be achieved, there must be a judicious price policy, which will not only secure an allocation of the resources for making the fulfillment of the targets possible, but will also maintain a certain balance between the various classes of the community.
ix. Enthusiasm:
In a democracy the government should make the objectives and targets known to the people and make the final acceptance or rejection of the plan, dependent on the will of Parliament. When the plan emerges in its final shape, the government must try to enlist the active cooperation of the citizens in implementing the plan. Popular enthusiasm is both the lubricating oil of planning, and the petrol of economic development,a dynamic force that almost makes all things possible.
x. Efficient Administrative System:
Finally, there must be an administrative system with efficiency and unimpeachable integrity, capable of discharging its responsibilities in connection with the execution of the plan.
Economic Planning in India- Nature of Economic Planning in India
Economic planning deals with the process of taking decisions with regard to use of available resources for the fulfilment of certain objectives or goals. Actually, planning process decides the nature, mechanism and beneficiaries of production behaviour of the economy.
It is generally defined as a continuous process which involved decisions or choices about alternative ways of using available resources with the aim of achieving particular goals at some time in future. Thus, economic planning develops a mechanism for identification and use of resources for the betterment of society at large.
Economic Planning in India – Types of Economic Planning in India
Main types of planning are as follows:
It is generally called as imperative planning. It is totalitarian in nature and works on the basis of directions. It comprehends all the inputs and outputs and incorporates innumerable details in respect of resources, factors and commodities and services. Plans formulated under this planning process encompass different units owning resources viz. private companies, cooperatives, individuals and public sector. Thus, the blueprints for the production of various goods and services bore upon all the resources owned by the innumerable units of various types available in the economy.
The comprehensive planning is governed by the centralized directions. The directions are based on the use of implementing instruments which give commands to the economy to work in a particular frame work. Implementing instruments consist of positive commands and negative controls. The commands are concerned with orders, fiats and directions with regards to what to do in the economy. However, negative controls are issued in terms of guidelines generally concerned with what not to do.
Naturally, there is a need of centralized agency which formulates these implementing instruments – Commands and controls. Since ultimate power of the country rests with the government so it has power to authorize Central Agency meant for the purpose. In India, it is Planning Commission who is responsible for doing all these things.
Thus, the government has an active role in comprehensive planning. Market mechanism does not affect the planning process. It is the comprehensive planning which enables the planners to give a concrete shape for vision of the government.
It is also called as indicative planning. It is democratic in nature. Under this type of planning, decision making process is dispersed and the implementation of plans is carried through market mechanism. Actually, it involves the dispersal of planning both in respect of formulation of the plans and their implementation. It is argued that the devolution of planning functions is necessary to different levels.
Public must have say in the planning process. It is important to say that public through elections participates in the government and through its representatives shapes the plan process. So in the present scenario in India too, there is need for decentralized planning as Panchayati Raj Institutions are now mandatory and they must have right to participate in the planning process as State Governments and Central Government involved themselves in formulation of their plans.
Decentralized planning also envisages the involvement of the social action groups organized on a voluntary basis. Since these groups are in constant touch with the people particularly with marginalized and deprived sections of society, they can contribute more in suggestive system of the planning process.
It also assumes that there must be dilution of the planning authority by bringing in nongovernment agencies like market prices, incentives together with public investment confined only to essential projects rather than the entire economy. Under this planning, planning agencies are involved in forecasting process rather than targeting. They also identify the major factors and sectors that are quite important for the economic growth. They are also required to quantify the contributions of these factors to keep them more effective and viable.
Decentralized planning is also based on an assumption that the market prices decide the nature of choices. It also formulates a framework of prices and other incentives to guide both public and private activity. However, it also earmarks the areas for the development of infrastructural facilities viz. roads, education and health. It accommodates government intervention to safeguard the environment from pollution, to eradicate poverty and deprivation, to correct inequalities of income and wealth etc.
Economic Planning in India- Objectives of Indian Planning
At the time of independence, Indian economy was a backward economy. In order to move the economy on the path of development, India adopted a model of planned economic development under the mixed economy structure.
The main objectives of planning in India include the following:
(i) Increase in National Income:
This objective gets translated into an increase in not only the national income, but also in the level of production and real per capita income.
(ii) Achieving Full Employment:
Unemployment is a curse in any society. It is more so when there is an inadequate social security or its total absence. Employment imparts dignity to human beings and is also an important means of reducing poverty and inequalities. The objective of planning was not to reduce inequalities by lowering the income levels of the richer sections but by raising the income levels of the poorer sections of the society.
(iii) Reduction in Inequalities of Income and Wealth:
India being an extremely poor country, inequalities of income and wealth translate themselves into absolute poverty and destitution. There can be no difference of opinion regarding the desirability of reducing such inequalities, particularly because they also lead to inequality of economic opportunities.
(iv) Creation of a Socialist Society:
This was an obvious and generally accepted objective inclusive-of there being equal opportunities of economic advancement for all sections of the society.
(v) Removal of Bottlenecks:
Removal of Bottlenecks in the way of economic growth such as, low rates of saving and investment, inefficient technology, problems of balance of payments, absence of basic industries and insufficient infrastructure, etc. is also an important objective of the Indian planning.
(vi) Industrialization:
Indian plans have adopted a strategy of industrialization of the economy with particular emphasis on heavy and basic industries. It also assigned a high priority to agricultural growth but in practice, agricultural and rural development received inadequate attention.
Some analysts are of the view that India, with its vast agricultural potential should have first concentrated on the development of agriculture and rural parts of the economy. Such an approach would have generated economic surplus needed for capital formation and investment.
(vii) Self-Reliance:
Our plans also aimed at “self-reliance”. It deals with the freedom from the need to import and therefore a policy of “import substitution” regardless of its cost. This objective should have been taken to mean “ability to pay for our imports through our export earnings”. Thus, we should have added to our export capacity and competitive strength in international markets.
(viii) Precedence to Public Sector:
In our planned growth, public sector was assigned a place of precedence over the private sector so as to acquire commanding heights of the economy and be in a position to use it for guiding the private sector along chosen lines. This was done while ignoring the fact that public sector undertaking is inherently less efficient than private ones.
Thus, the basic objectives of India’s Five Year Plans are rapid economic growth, full employment, self-reliance and social justice. Apart from these basic objectives, each five- year plan takes into account the new constraints and potential/possibilities during the period and attempts to make the necessary directional changes and emphasis.
Economic Planning in India – Importance of Economic Planning in India
Planned economy has not been established in any country in a day or in a year. Planning in practice has a history of its growth and change over few decades. History of economic growth in some countries reveals that planning has been painfully evolved and its growth or change is attributed to certain factors which have facilitated the growth of planned economy in an increasing number of countries.
Its development is the extensive and intensive. It is intensive in the sense that its process of perfection is never complete. It is always subject to improvement. Its requirements are greatly changing, certain historical factors have profoundly favoured the development of planned economy. A variety of factors have led to the adoption of planning in various countries.
The importance of economic planning may be explained as follows:
i. Best Utilisation of Natural Resources:
Economic planning facilitates best utilisation of natural resources. By adopting the process of economic planning it is possible to utilise available labour and capital in the interest of nation which helps in maximisation of national output.
ii. Growth in National and per capita Income:
The maximum level of production increases the level of savings and investment which ultimately provide sufficient capital for economic development. Hence planned economy proves an important instrument for growth in national and per capita income.
iii. Improvement in Living Standard:
The standard of living of India’s population is far below the required level. A subsistence segment of population fails to even meet their basic needs of life. The main reason responsible behind such a miserable situation has been low level of per capita income and social evils which can be improved by adopting the process of planning.
iv. Balanced Economic Development:
The form of economic growth in India has always been unbalanced. While preparing industrial plan, more emphasis has been given to development of consumer industries whereas much is left remained to plan for development of basic industries. The process of planning may be helpful in balanced economic development.
v. Full Employment:
The problem of unemployment can be scale-down by encouraging development of small and cottage industries in the country. It will also reduce the pressure of population on agriculture. In India’s five-year plans, efforts have been made to generate more and more employment opportunities.
vi. Equal Distribution of Wealth and Income:
In India, there exists serious inequalities in the distribution of income and wealth. A small minority of population is rolling in luxuries, while the vast masses of people are unable to make their both ends meet. The existence of plenty for the few amidst mass poverty is indeed the most undesirable phenomenon in the country and intensity of which can be minimised by adopting planned economy.
vii. For Self-Sufficiency:
The initial process of economic development requires huge capital investment. By adopting the process of planning available capital resources can be best utilised in the interest of nation.
Economic Planning in India – Need of a Economic Plan
Sometimes economies, having adopted planning techniques in production and organisation, do not formulate such a general framework in the form of a plan. In countries where the scope of planning techniques is narrow, where controls are not very comprehensive, and where entrepreneurial liberty and competitive freedom are retained, it is not necessary to elaborate so detailed a scheme for the whole nation, because there the objectives of planning are not very comprehensive and they can be fulfilled even without having a very comprehensive framework in the form of a plan.
Constituents of a Plan:
A plan includes evaluation of financial and physical resources of the whole nation and, therefore, it consists of “a budget plan (financing of the plan by budget); a currency and credit plan (supply of notes and credits by the banks); a ‘valuta’ plan (the supply of foreign exchange); and a plan for foreign trade”. It also includes programmes regarding industries, agriculture, transportation and communication, social services, and other branches of economic life.
It is elaborated, in principle, in terms of money and also in physical terms. Financial figures are presented in terms of money at a certain price level and physical figures are expressed in terms of technical indices and standards. Productivity is expressed in ratios and co-efficient.
Thus every plan has two aspects. First—a financial branch of the plan and Second—a physical branch. Planning implies full utilisation of all productive resources of the nation and productive resources have also to be accounted for in financial terms. “The financial part of the planning, however, is only an instrument of social accounting. It is never allowed to become an obstacle to full and rational utilisation of resources.”
Physical Aspects:
The national plan sets physical targets of production for industries, agriculture, transportation, social and cultural services, employment, and consumption. It may be called the plan in kind or physical plan. Obviously the various targets are to be set in such a way that all the resources at the nation’s disposal are utilised in the best possible manner. They must be knit together and balanced mutually.
Financial Aspects:
The plan has financial aspects as well because, as already mentioned, the commodities produced and the means of production used are accounted for in terms of money value. This is called plan in money or financial plan. Wage to the workers are paid in money. The purchase and sale between nationalised sector and other sectors of the economy such as co-operative sector or small private commodity producers and capitalist sector take place through the medium of the market. A part of the national income is spent for the purchase of commodities and services and the rest of it is saved. An account of all this must be kept and it must be coordinated with production plan as well.
Period of Plan:
We may distinguish two kinds of plans having different features in relation to the period of time.
The Long Period Plan:
The normal period in most of the countries has been five years. In Soviet Russia as early as 1927-28 when there was a talk’ for forming a ‘perspective plan’ the main issue was as to what should be the normal period of the plan. Five years was initially chosen to be the period of the plan “on the ground that this was likely to be the construction period of the more ambitious technical projects to be undertaken in the years ahead”.
There was a demand for a perspective of development over a period of ten or fifteen years and a plan for fifteen years was also prepared. However, it was ultimately realised that chances of uncertainties were great as “the horizon of vision was extended to endow anything much longer than a five-year scheme of development with too many imponderables for it to have much practical value”.
The Short Period Plan:
These are usually one-year plans called annual plans divided into half-yearly, quarterly, or even monthly plans. The five-year plan is divided into various sections and each section is allotted a quota, which is scientifically fixed and related to smaller periods within which it is to be fulfilled. It is done to have a better control over each section of the national resources and it is also possible to study month-to-month, or year-to-year progress of each section of the economy.
Economic Planning in India – Size of the Economic Plan
The size of the plan depends upon the following factors:
1. On the basis of past experience certain facts are collected and calculated. Various inquiries conducted in the past, reports and other research publications of the past will provide material which would be included in the plan and which will partially represent or determine the magnitude of the -plan.
2. Objectives of economic planning will determine the various targets of the plan and they would thus characterise the largeness or smallness of the plan. They are factual basis on which the framework of the plan is outlined.
3. What would happen in the future will also affect the magnitude of the existing programme or plan. Factors based on forecast may be real or unreal and may be certain or uncertain. And, therefore, it is difficult to evaluate them. However, they can be roughly estimated and, as far as possible, should be included in the plans as well. Crop position in future, price of imports and exports, supply of foreign exchange, etc., are such factors which are sometimes difficult to be pre-determined exactly, but they are so important they should be included in the plan.
Economic Planning in India – Formation of Various Plans
The general perspective or long-term plans as well as the short-period plans or annual plans are to be formed both from the top as well as from the bottom. The drawing up of annual plans must being some months before the coming year. It is to be checked and counter-checked by various departments and it requires mutual verification of provisional drafts.
The general plan should be verified and coordinated with the partial or sectional plans and the long-term plan is to be verified and coordinated with the annual plans.
At the top, the planning, commission formulates a draft plan in consultation with the various ministries or economic councils. The Planning Commission has an elaborate and comprehensive statistical organisation. In India there is a Central Statistical Organisation (CSO) which is the highest statistical department connected with the Planning Commission and provides material for the formulation of the economic plan.
There may be various departments of the Planning Commission, there is a functional division and there is also a coordination division. The branch division prepares a plan, the functional division later on examines its constituents from different points of view and finally the coordination division fits together the various sectoral targets into a unified general plan. The general plan is then circulated amongst the various ministries or economic committees for study and suggestions.
At the bottom, each factory and each firm prepares its individual perspective plan on the basis’ of its past experience and future requirements. Generally it concentrates on technical possibilities rather than on over all requirements. The various estimates or annual plans of the factories and collective farms then go to the centre through two different channels at the district, regional and republican levels—one through the planning authorities and second through departmental authorities.
And, finally, balancing of the technical possibilities, recommendations, suggestions and requirements are assessed by the Planning Commission in the light of the two draft plans—one from the top and other from the bottom.
The five-year plan is broken into annual plans. The former does not carry details. The latter, therefore, is prepared for fixing detailed targets to be fulfilled in each year. In determining the annual plans almost the same procedure is followed which has been discussed above in connection with the perspective plan, with a little difference that it lays more emphasis on planning from the bottom.
The procedure of formulating the plans in India has been evolved over the last decade on the same principle as is followed in other countries. They are made from the top as well as from the bottom, though perfection is yet lacking and we have to improve the entire procedure at various levels. It is now claimed by the government that “planning in India, as elsewhere, it essentially a backward and forward process an exercise in successive approximation as well as successive coordination”.
Economic Planning in India – Stages of Five Year Plan
The following are the various stages of Five Year Plan:
In the First Stage, the Planning Commission lays down tentatively certain general goals for a long time, i.e., for fifteen or twenty years, after studying carefully the various technical possibilities, the basic and non-basic need of the economy and the various methods of development. These broad figures are some sort of ‘control figures’ or ‘guidelines’ supplied to the various working groups of the Commission. These working groups consist of technical personnel, advisers and administrators of the Central Ministries and Planning Commission, who examine them very carefully.
They either accept the proposals of the Commission completely or change them at various levels and then proceed to indicate what should be the long-term targets of their respective fields. They also prepare the five-year targets and work out the details of the policies and programmes for attaining them. At the same time there are various studies made by the ministries, state governments, research organisations and industrial enterprises and the working groups are supposed to take advantage of them as well.
In the Second Stage, the Commission formulates a short memorandum of the five year plan, which is placed before the Cabinet and the National Development Council.
In the Third Stage, a draft outline of the five year plan is prepared in the light of the observations made by the National Development Council on the Draft Memorandum, and is published several months before the plan is to come into force. This is presented before the Parliament for discussion, sent to the various Central Ministries, state bodies and state governments, and is discussed widely in the press, universities and similar institutions.
The Fourth Stage relates to the preparation of the final report on the five year plan. It is presented before the Cabinet and the National Development Council, and finally before the Parliament for approval. After the approval, it is adopted.
Besides making the plan from the top in this manner, the Government of India tries to make and change the plan on the basis of the evaluation of the targets and requirements of the basic units of organisations from the bottom as well.
Economic Planning in India – Role of Government in Economic Plan Formulation
The states, districts and the blocks are also supposed to make their own plans, keeping in view the broad targets which are included in the draft outline. They are later on modified on the lines of the preparation of the amended figures to be included in the final plan. In this way the tentative figures of the draft outlines are sent from the Planning Commission to the states, districts and block planning authorities, who discuss them, modify them and send them back to the Commission.
The Commission, on the basis of these requirements and suggestions, prepares the final plan, after carefully examining their programmes and projects from a technical and economic point of view.
After making a five year plan, it is supposed to be one of the duties of the Planning Commission to study and examine the various charges from time to time, and modify the plan as and when required. Besides, the five year plan is broken into annual plans. In November or December of each year there are a series of consultations between the Commission and Central and State Ministries for reviewing the progress of the last year or years of the five year plan regarding the reassessment of resources and technical possibilities of adjusting and readjusting the targets and requirements of the annual plan for the next year.
The annual financial budgets of the Central as well as the State Governments are formulated in the following February keeping in view these annual plans. The annual plan has now become a very important part of the planning procedure in India and has in fact evolved into a very important instrument of federal and state financial relationship. An annual plan introduces, on the one hand, a much-needed flexibility in the implementation of the five year plan and, on the other, sets out the programmes of development to be implemented every year with sufficient details.
Economic Planning in India – Recommendations of ARC
The Administrative Reforms Commission examined the working of the machinery of planning in India and made the following recommendations in connection with plan formulation.
1. The Planning Commission when seeking guidelines from the National Development Council for the formulation of the National Plan should give a tentative framework of the plan considered feasible by it and also indicate other alternative approaches calling for different degrees of effort.
2. When the Commission lays down the lines of a five year plan, it should have before it a perspective of development over a longer period. The period may be different for different sectors of the economy, ten years for some, fifteen for others and even a longer period for some others.
3. The five year plan should take into account only such foreign aid as can be reasonably assumed to be forthcoming. It should also take into consideration internal contingencies like failure of monsoons which are a normal cyclical feature.
4. Each scheme or project involving foreign aid should clearly set out the measures for dispensing with such aid in the shortest possible time.
5. The composition of Working Groups should be broad based. They should be compact bodies’ presided over by Secretary or other senior officer of the Ministry concerned. The Working Groups at the centre and their counterparts in states should maintain a close and regular communication with each other.
6. The Planning Commission should, to the maximum extent possible, make use of the special advisory bodies which are set up by the Central Ministries.
7. Each Ministry concerned with developmental programmes should have a separate Planning Cell which should be small in size.
It should primarily have the following functions:
(a) To assist the Ministry and through it the Planning Commission in the formulation of the five-year plan;
(b) To scrutinise and coordinate the detailed projects and schemes of the executive agencies under the Ministry; and
(c) To keep in touch with the progress of plan schemes and programmes and prepare the overall progress and valuation reports. Besides that, each Ministry or Department should constitute an Internal Standing Committee for Planning.
8. At the time of the formulation of a five-year plan, the concerned Development Councils should be requested to prepare their own plans in the light of general guidelines to be given by the Planning Commission and send them to the concerned Ministries.
Detailed sectoral planning should be left to the State Governments.
Economic Planning in India – Execution of the Plan
In most of the planned economies the central Planning Commission is an advisory body, and therefore the execution of plans is entrusted to the central administration called government departments and various ministries. However, some contact is established between the Planning Commission and the various central government organisations which are entrusted with the task of executing the plan.
In executing the plan at the early stage of planning there may be greater centralisation, but later on more and more decentralisation is to be attained. It is so because in the early stage greater centralisation is required for effective control and administration, while in the later stage decentralisation bring effective administration and control.
Most of the planned economies of the world today, including Russia and East European countries, are tending towards greater and greater decentralisation because it prevents concentration of economic power which planning in the past tended to create and diminishes political danger directed agents democracy.
There is a tendency towards establishing ‘democratic decentralisation’ in India as well. The pivot of democratic decentralisation is the Panchayat Semiti consisting of Sarpanches and co-opted members. For each block area there would be a samiti and it would be in charge of block activities as also of some work out schemes to meet them and execute the schemes.
“The purpose is to generate within our various village communities social self-propulsion so that they may all become dynamos of social energy that would develop the motive force necessary for the progress of our country.”
Preparation of the plan and the task of translating the various objectives of the plan into a general plan is the work of planning experts and for that a planning commission or a central planning committee is appointed by the government. The Central Planning Commission is a special body of experts and should work independently in its task of plan-formulation. If necessary, it must be able to oppose the views of the central political government and to point out the limitations or the inner contradiction in the various objectives of planning and should be able to “prepare alternatives and variations with their pros and cons from the point of view of accepted criteria.”