Economic Planning

  1. Which was the era of planning?

20th century

  1. How was planning in socialist country?


  1. Name some countries which had capitalist system?

U.S.A and U.K

  1. Which system was followed in 19th century?

Laissez faire state.

  1. Which was the first country to practice planning?

Soviet Russia

  1. Give the definitions of economic planning?
  • According to Lionel Robbins, “strictly speaking, all economic life involves planning…. To plan is to act with a purpose, to choose and choice is the essence of economic activity”.
  • In the words of Barbara Wootten, “Planning may be defined as the conscious and deliberate choice of economic priorities by some public authorities”.
  1. What is the main need of plan in undeveloped countries?

They plan for economic growth and development

  1. What is the reason for emergence of economic planning in underdeveloped countries?

Another main reason for the emergence of planning in underdeveloped countries

is the failure of the market mechanism

  1. What are the cases of Laissez Faire?
  • Under Laissez faire, income is not fairly distributed. As a consequence, less important and less urgent goods are produced for the wealthy people while the poor lack basic goods like education, health, housing, good food and ordinary comforts. Under such a situation, the State can control economic activity by means of planning and reduce inequalities of income and wealth.
  • The market economy is a victim of trade cycles. And there will be alternating periods of prosperity and depression. And during depression, there will be bad trade, falling prices and mass unemployment. So there is need for state intervention. By means of proper planning, the State can control trade cycles as they did in the case of former Soviet Russia

10. What are the problems of planning in backward economy?

  • Planning is much more necessary and much more difficult to execute in backward than in advanced countries.
  • First of all, “planning requires a strong, competent and incorrupt administration” (Arthur Lewis). But most of the economically backward nations have weak, incompetent and corrupt administration.
  • Further, they have democratic planning. So they cannot do things in a quick manner as was done in former Soviet Russia.
  • They have to go slow. And agriculture is the main stay of their economies. Since agriculture depends upon natural factors which are uncertain, there is a lot of uncertainty about their agricultural programmes.
  • Over–population and low capital formation are some other important problems of planning in underdeveloped nations.
  1. What is the nature of planning?

The nature of planning is determined by the type of economic system – capitalism, socialism, mixed economy – in which it is practised.

  1. What is the difference between economic planning in capitalist and socialist system?

There will be partial planning in a capitalist economy, (e.g., U.K.) but a socialist economy is a totally planned economy (e.g., Former Soviet Russia). In a mixed economy like India, both public sector and private sector play important roles in economic planning.

  1. How long is plan period?

It is usually 5 years

  1. Who takes control of planning period?

Planning commission

  1. What is the first step of plan?

The first step in drawing up a Plan is to determine a growth target for an economy over the Plan period.

  1. How are sectors divided for plan?

The planners divide the economy into a number of sectors such as agriculture,  industry and service sector

  1. What are the types of planning?
  • Centralized Planning : In a socialist economy (eg. Former Soviet Russia), there was centralized planning; it was planning by direction
  • Planning by Inducement : In a democracy, Planning is done by inducement.

For example, ours is a mixed economy where there is a public sector and a private sector.

  • Indicative planning : In this type of planning, the government invites representatives of industry, and business and discuss with them in advance what it proposes to do in the Plan under question and indicates to them its priorities and goals.

18. How are economic plans divided?

Economic plans can also be divided into midterm plans, shorterm plans and perspective plans.

  1. What is rolling plan?

Unlike the Five Year Plan with fixed targets, in the case of the rolling plan, at the end of each year, targets will be fixed by adding one more year to the Plan. That is, without fixed targets for all the five years, depending upon the performance of the Plan in the current year, targets will be fixed for one more year. Like this, it will go on a continuous basis. That is the idea behind the rolling plan.

  1. When was national planning commission set up in India?

The National Planning Commission was set up in India in 1950

  1. What was the major aim of Indian planning commission?

A major function of the Planning Commission was to “formulate a plan for the most effective and balanced utilization of the country’s resources”.

  1. When was the first five year plan done?


  1. What are objectives of five year plan?
  • To raise the national income. This is known as Growth Objective ;
  • To increase investment to a certain level within a given time ;
  • To reduce inequalities in the distribution of income and wealth and to reduce concentration of economic power over resources ;
  • To expand employment opportunities ; and
  • To remove bottlenecks in agriculture, manufacturing industry (especially capital goods) and the balance of payments
  1. What is the strategy adopted in Indian planning system?

The strategy adopted in Indian Planning is often referred to as ‘Mahalanobis strategy’. In this strategy, emphasis was laid on rapid industrialization with priority for basic and heavy industries.

25.What was the purpose of First five year plan?

The First Five Year (1951-56) stated that the purpose of planning in India was to initiate “A process of development which will raise living standards and open out to the people new opportunities for a richer and more varied life”. The Second Five Year Plan (1956- aimed at rapid industrialization with particular emphasis on the development of basic and heavy industries.

  1. What was the purpose of second five year plan?

It was during the Second Plan period, the Government embraced the goal of democratic socialism. The Third Five Year Plan aimed at self – reliant and self – generating economy. After the Third Plan, we had a “Plan Holiday”.

  1. What are the three annual periods?

The Fourth Plan did not commence immediately after the Third Plan. We had three Annual Plans (1966-69).

  1. What is the Fourth five year plan?

The Fourth Five Year Plan (1969 – 74) had two basic objectives:1. Growth with stability, and 2. Progressive achievement of self reliance.

  1. What is the fifth five year plan?

The Fifth Plan (1974-79) focused on growth with social justice. The slogan during the period was Garibi Hatao (Removal of Poverty). So, the two main objectives of the Fifth Plan were removal of poverty and attainment of self–reliance.

  1. What are the main objectives of planning in India?

The main objectives of Planning in India may be grouped under four heads: Growth, modernization, self–reliance and social justice.

  1. What is Hindu rate of growth?

In the first 30 years of planning, the trend rate of growth of national income was 3.5 percent. Eminent economist Raj Krishna called it the Hindu rate of growth.

  1. What is modernization?

The term ‘modernization’ refers to a number of structural changes in the economy.

  1. What is social justice?

By social justice, we mean equal opportunities for all. That means, improving the standard of living of the poorest groups and reduction in inequalities in income and wealth.

  1. When was ninth five year plan started?

The Ninth Plan covered the period from 1997 to 2002.

  1. What are the things considered the ninth five year plan?

The Ninth Plan considered (1) Quality of life of citizens, (2) generation of productive employment and (3) regional balance as areas of special importance for State intervention.

  1. What is the main concentration of 10th five year plan?
  • Reduction of poverty by 5 percentage points by 2007 and 15 percentage points by 2012.
  • Gainful employment to the addition to the labour force during the Plan period;
  • Universal access to Primary education by 2007 ;
  • Reduction in the decadal rate of population growth between 2001 to 2011 to 16.2 percent ;
  • Increase in literacy to 75 percent by 2007
  • Reduction in infant mortality rate (IMR) to 45 per 1000 live births by 2007 and to 28 by 2007;
  • Reduction of maternal mortality ratio (MMR) to 2 per 1000 live births by 2007 and to 1 by 2012.
  • Increase in forest and tree cover to 25 percent by 2007 and to 33 percent by 2012 ;
  • All villages to have access to potable water by 2012 ; and
  • Cleaning of all major polluted rivers by 2007.

37. How many five year plans has been completed?

Now we are in the final stage of 12th five year plan

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