CU-BA-Eng-SEM-V-Economics-V-Second Draft

You can transform agriculture and primary production economies into a more balanced economy only through planning. Heavy, medium, and light industries. Agriculture and industry stimulate each other by creating demand for their products. The development of agriculture is also essential for the supply of raw materials to the industrial sector. Economic planning is carried out when designing plans for the agricultural and industrial sectors of developing economies. 8. Maximizing national income and improving the standard of living: It is the responsibility of modern countries to maximize national income and improve the standard of living. Only when the government correctly meets the country's economic needs and takes the expected actions in its economic planning, it can be guaranteed. 8.4 OBJECTIVES OF PLANNING The plans formulated by developed countries assume target growth rates and some options for allocating growth rates for various types of expenditures on available goods and services (public and private consumption, social investment, direct productive investment, etc.) Inventory and export). In addition, because the plan must be balanced, the sum of these components of aggregate demand must fall within the possible total supply of goods and services after considering the current ideal level of balance of payments surplus. The growth rate of certain types of demand; once the total production growth rate is selected, the stock of investment and direct production is set in a fairly narrow range especially for technical considerations. But an important area of choice involves the respective growth rates of individual private consumption and so-called collective consumption, such as education, health, urban facilities, and cultural provision. Another very prominent planning goal (and the figures in the plans of the United Kingdom, the Netherlands, France, and Italy, to name a few) is to correct regional development imbalances. One of the most important functions of economic planning is to achieve coherence between different economic objectives. Some ideal goals may conflict with other goals. For example, while it is possible to stimulate the economy to increase production and employment levels substantially, measures taken to this end can also lead to a rapid rise in prices, which in turn can lead to higher prices. Of imports and a decrease in exports; the result can be a balance of payments crisis. Different types of plans are as follows: 151 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Master plan: The master plan commonly known as socio-economic planning is more comprehensive. It's not just about setting some financial goals here and setting physical goals there. This is a global effort to achieve the all-around development of the country. This type was first adopted by Soviet Union Stalin and has been used in Russia ever since. Most third-world countries adopt this type. The four-year and seven-year plan is such a performance. 2. Limited planning: Limited planning cannot concentrate on everything. A focal socioeconomic activity. Countries that choose this type of planning have chosen the main goals that the entire society considers to be fundamental. Through proper planning and adjustment of individual and group activities, it guides social life and activities in a way that achieves these goals. 3. Administrative planning: Government planning is nothing more than administrative planning. Administrative planning mainly involves administrative procedures. It seeks to provide a broad framework for action because it defines the main goals, establishes inter-office policies, and links departmental policies and plans with relevant departments. Its main purpose is to make the policy plan more specific and more feasible. Administrative planning can be divided into four different stages, namely policy planning, administrative planning, project planning, and operational planning. 4. Plan planning: According to Millett, it is about “the specific purpose to be implemented within the framework of existing public policies and the procedures to be used by administrative agencies”. It is an overall review of the proposed plan to determine the number of services involved, the human and financial resources required to provide these services, the general procedures required, and the organizational structure required to use these resources in the best way. It is a detailed plan to implement the plan in a specific department. 5. Operational plan: According to Pfiffner, it involves the systematic analysis of authorization procedures and the determination of ke.After determining the goals and finding the means and methods to achieve these goals, the department and department heads formulate specific procedures and how to use these procedures to save time, speed up 152 CU IDOL SELF LEARNING MATERIAL (SLM)

production, and increase net operating plans. Production. The different units are assigned specific functions, and their performance is measured according to the time, quantity, and quality of the production and the product in general. In fact, it is the program planning \"workshop\". In addition to the above types of planning, several new types of planning have emerged in recent years, called perspective planning, rolling planning, short-term or long-term planning, and regional planning or grassroots planning. 8.5 PLANNING IN DEVELOPING COUNTRIES: APPROACHES After the end of World War II, it has become a recognized practice for the governments of developing countries to announce \"development plans.\" These are medium-term plans, which generally last for five years. The goal is to choose a period long enough to include projects that span multiple budget years, but not enough to delay the regular evaluation of development work that spans a series of programs. The Development Plan attempts to promote economic development in four main ways: (1) By assessing the current economic situation and providing relevant information; (2) Increasing the overall investment rate; (3) By carrying out special measures aimed at breaking the production bottleneck of important economic sectors Type investment; and (4) Attempts to improve coordination between different parts of the economy. Among them, the first and fourth may be the most important and least-known functions in economic planning. Without comprehensive and reliable information, without effective economic coordination between different government departments and agencies in the public and private sectors, the other two planning functions cannot be effectively performed. In most developing countries, little information is available on the economy, and planning provides the impetus to obtain and analyze the data necessary to better understand economic operations. To strengthen coordination, it is necessary to disseminate reliable economic information that shows the future economic intentions of the government and the direction of its activities so that 153 CU IDOL SELF LEARNING MATERIAL (SLM)

relevant personnel from the public and private sectors can carry out the appropriate plans. Do them according to the government plan. This can be considered as the main reason for the publication of the development plan, although the government that publishes the plan is not always aware of this. Newly independent countries begin to plan their economies, usually starting from simple development plans. In most cases, this is just a tentative list of personally conceived social and economic projects submitted by various government departments for the plan. As long as the project is selected well (for example, to break some obvious bottlenecks in production) and designed from a technical perspective, such a simple plan can be very useful. But it often produces a series of weaknesses due to insufficient coordination. (1) Since the project is developed piecemeal in different government departments, there is generally no systematic attempt to compare the relative costs and benefits of the plans proposed by different departments in a unified way. Therefore, the set of projects included in the plan may or may not represent the most effective mode of investing in available government resources. (2) Lack of coordination often leads to useless duplication and the inability to take advantage of the complementary relationship between various projects. (3) A simple project list cannot provide a clear key system for project implementation. Typically, projects that are relatively easy to implement are way ahead of other projects. Although they require more time to prepare and implement, they can contribute more directly to the expansion of national production and government revenues. When projects that are easier to implement generally occur in the areas of social welfare, education, and health, this can have serious budgetary consequences and, although they can indirectly promote long-term economic development, require a large amount of increasingly large funds. Recurring government expenses after the flow is complete. An obvious way to remedy these deficiencies is to develop a more systematic public investment plan as a whole. For this reason, it is first necessary to carefully estimate the total amount and the temporal pattern of government financial resources obtained from internal sources and external loans and assistance during the planning period. Second, it is necessary to make realistic estimates of the costs and benefits of alternative investment projects in the entire public sector to select the most productive project portfolio, while taking into account the important complementary relationships between different projects. When choosing the best combination of projects to include in the plan, it is necessary to pay special attention to 154 CU IDOL SELF LEARNING MATERIAL (SLM)

the time pattern of costs and benefits. A poor country with limited sources of public income will have to discount future benefits to a large extent relative to more direct benefits, and priority must be given to the types of projects that obtain faster returns in the form of expanded production and benefits. This may lead to a higher rate of return, but only in the more distant future. The question of implementing a comprehensive public investment plan helps to emphasize the key role of the annual budget in development planning. At the overall level, with a certain amount of foreign aid, the total investment capital flow available to the government during the plan period depends on its ability to earn income (and borrow from domestic sources). It is also important to control your investment. Plan During the period, non-development or \"consumer\" expenses increased year by year. At the individual project level, the fact that a project requires several budget years to complete does not eliminate the need for annual budget control to ensure that it is implemented in stages according to the originally planned timetable. Only through the discipline of annual budget control can the medium-term development plan be closer to the original plan. Few developing countries meet the budgetary discipline required to implement comprehensive public investment plans. However, this has not prevented them from moving from simple development plans to \"comprehensive\" economic planning, including the public and private sectors, and regulating the general level and detailed composition of economic activities. The motivation for comprehensive planning comes from a variety of reasons: distrust in the automatic functioning of market mechanisms and their ability to promote economic development; by the desire to maintain national economic independence through government control of foreign trade and investment; economic development since the 1950s theoretically emphasizes the need to \"promote vigorously\" to overcome the indivisibility of technology, and it is necessary to establish multiple projects that support each other at the same time to enjoy the benefits of technological complementarity. The economic development plans announced by developing countries in the 1960s were quite detailed. The trend of \"quantitative\" planning encourages the use of detailed statistical estimates and forecasts, although the main statistical sources on which these calculations are based are often unreliable or speculative. Advanced mathematical techniques are also being used more and more. A development plan is divided into three parts: (1) The target figures for income and per capita consumption growth to be reached at the end of the plan (including the estimated 155 CU IDOL SELF LEARNING MATERIAL (SLM)

figures for each year during the plan period); (2) The need to achieve the target figures Estimates of the number of various resources (such as capital, labour, and foreign exchange) (including the time profile of the speed at which these resources are needed during the planning period); (3) Parallel but independent estimates and forecasts of the quantities and time patterns of these resources The resources are expected to be available to the government and the entire economy during the plan period. The well-designed planning documents issued by some developing countries can be said to be an attempt to quantify the information required under the three headings as much as possible and to test the formal consistency of the plan. This includes asking (a) whether the total amount of available resources is sufficient to meet the total resource demand determined by the target number, and (b) whether the planned resource allocation for different sectors is consistent with the detailed target number. Different commodities are needed to increase consumption and investment and service production. When the resources required by certain industries are intermediate products (production in other industries), input-output tables are often used to check whether the output of different industries is sufficient to provide the end-user target digital consumption and investment. There is also \"indirect use\" required by other industries. More advanced planning models use scheduling techniques to try to answer additional questions (c) Is the planning model for resource allocation the most effective, that is, does it minimize the resources required to reach the target number compared to other models. 8.6 STRATEGY OF PLANNING By strategy, we mean using the right method/method/formula to achieve the goal being planned. The economic planning of a country is always guided by a clear strategy. The determination of such strategic objectives is mainly based on the critical evaluation conducted by the committee, taking into account the political, economic, and social aspects of the country. a) Maharanobis growth model: This strategy puts too much emphasis on heavy industry investment to achieve industrialization, which is considered to be the basic condition for the country's rapid economic development. Therefore, the strategy is conceived and implemented to enable the 156 CU IDOL SELF LEARNING MATERIAL (SLM)

plan to successfully create more employment opportunities, establish a solid capital base, and improve domestic production and technological capabilities. Therefore, the focus is on introducing relief employment and income opportunities for the oppressed who are abused and who do not contribute to the country’s net product. Therefore, it is expected that small-scale and cottage industries will play a key role in job creation. b) Heavy industry strategy: The planning strategy in the Mahalanobis's growth model emphasizes investment in heavy industry to accelerate the process of industrialization, which is the basic condition for rapid economic development. The Planning Commission supports this heavy industry strategy for two reasons: First, heavy industry investment is helping the national economy accumulate more equity capital and accumulate at a faster rate. Second, the heavy industry will lay the foundation for a strong and self-sufficient economy by expanding activities in all sectors and eliminating the country’s dependence on foreign machinery and equipment imports. Alternative methods of developing the light industry will help the country produce more consumer goods to improve people’s living standards in a shorter period and control the price spiral of inflation. However, this alternative strategy can be achieved by ignoring the accumulation process of domestic social capital. c) Employment goals of development strategy: India’s development strategy planning initially ignored employment goals. Despite the high population pressure and the growing unemployment problem, planners have failed to take appropriate measures to create jobs for the country’s growing millions of people. d) Social goals of the development strategy: One of the important aspects of the Mahalanobi's development strategy is to increase production levels while achieving better and fairer income and wealth distribution. Indian planners are also influenced by Fabian's socialist strategy, which consists of adopting fiscal policies of taxes and public spending to achieve the two important social objectives of the 157 CU IDOL SELF LEARNING MATERIAL (SLM)

plan, namely, eliminating inequality in the distribution of income and wealth and, second, establishing equality and justice, as the foundation of a socialist society. One of the important aspects of the Mahalanobis development strategy is to increase production levels while achieving a better and more equitable distribution of income and wealth. Indian planners are also influenced by Fabian's socialist strategy, which consists of adopting fiscal policies of taxes and public spending to achieve the two important social objectives of the plan, namely, eliminating inequality in the distribution of income and wealth and, second, establishing equality and justice, as the foundation of a socialist society. 8.7 DIFFICULTIES IN DEVELOPMENT PLANNING Although the degree of professionalism in formulating development plans on paper continues to increase, the actual performance of developing countries in implementing any complex development plans is not very encouraging. Development plans, even on paper, rarely overcome the first and most obvious practical obstacle, that is, how to match the total investable resources required to meet the economic development speed set by the plan with the total investable resourcesMethod. This stems from the practice of starting with a \"politically acceptable\" minimum economic growth rate, while optimistically assuming that the problem of providing the necessary resources will be resolved in some way. This is contrary to actual planning. It must start from the supply of available resources and find the maximum possible economic growth rate that can be obtained from these resources. There seems to be a tendency to be overly optimistic about the availability of resources and underestimate project costs. Development plans are often shortened halfway because this optimism leads to a balance of payments difficulties and causes the authorities to drastically reduce their efforts. Sometimes, the plan can also be deliberately formulated, beyond the scope of the available internal resources to maintain, as a well-designed exercise to obtain more external help. When foreign aid fails to fill the resource gap of the plan, the typical response is not to reduce the size of the plan, but to adopt a less politically painful (and administratively simpler) expedient, maintain the target rate set publicly by the plan, and then try to fill it. The resource gap comes from “mandatory savings”, which is expected to be caused by budget deficits and inflation. Unfortunately, this \"forced saving\" method does not work in most developing countries, because the public will soon lose confidence in the stability of the purchasing power of money. After all, prices tend to rise at the same rate as 158 CU IDOL SELF LEARNING MATERIAL (SLM)

public expenditures. Domestic inflationary pressures increase import demand pressures while rising domestic production costs inhibit export expansion. This imbalance can be alleviated by raising interest rates to reduce the demand for investable funds and stimulating savings, and by devaluing currencies to curb imports and stimulate exports. Some governments have. However, many developing country governments are generally more willing to keep interest rates artificially low and provide cheap loans to favored sectors of the public sector and the private sector involved in modern manufacturing. Many people are unwilling to depreciate because they are worried that speculation and rising costs of imported goods will lead to further price increases. Therefore, many people tend to rely heavily on detailed administrative controls and import licenses to allocate scarce investment funds and foreign exchange supplies. Attempts to control the entire economy in detail through a network of direct administrative control inevitably lead to inefficiencies and delays, which are compounded by insufficient administrative agencies and a shortage of qualified public officials. The closer the \"integration\" of plans between different economic sectors, the greater the damage to effective coordination, because delays in one sector will lead to general delays in other sectors. The main weakness of formal \"quantitative\" economic development plans is that they distract people from several important qualitative factors and focus on physical quantities rather than incentives. Qualitative factors include the actual capacity of the administrative agency to implement the plan, the degree of political stability, and the public's confidence in the government's willingness and ability to achieve the stated objectives, which are critical to actual implementation. The success of the plan. The focus on physical quantities seems to be due to the belief that it is necessary to indicate the target level of production of individual commodities; it distracts attention from the important fact that many economic activities are carried out in the private sector and respond to incentives. These plans often encourage efforts to enforce control of private sector activities. These effectively prevent unplanned production activities to a large extent, but without proper incentives, they are not effective in inducing expected production growth. Developing countries can do better through less comprehensive planning, make more use of indirect control through market mechanisms, and focus on breaking through bottlenecks, especially the expansion of production, agriculture, and export industries in the region. Some developing countries have succeeded in achieving 159 CU IDOL SELF LEARNING MATERIAL (SLM)

rapid growth simply by focusing on these important sectors of the economy without well- designed planning tools. 8.8 PRICE MECHANISM AND PLANNING Prices play an important role in the allocation of resources. In some areas, administered price policies are adopted. The Government also provides price subsidies to help the target group. The purpose of the government is to maximize the well-being of the public. For those who cannot afford to buy products at market prices, the Government will make products for free or subsidies (subsidies). Therefore, in a mixed economy, we have greatly enjoyed individual freedom and government support to protect the interest of weak parts of society. The Indian economy is considered a mixed economy since there are excellent areas for the functions of the public and private sector and economic planning. Even countries such as American, United Kingdom, which were known as capitalist countries, are also called the currently mixed economy for their aggressive roles in economic development. The price mechanism can be defined as an apparatus for reaching economic decisions through a continuous process of selection of individual people and producers in the market. As a result of the determination of the Milido in the economic units, it refers to the final production pattern of production (producing, when, and replacement, each home, and company). Specific global part. This system works through the continuous equalization of money prices and the shortening of money, profit, and limit utility. It is based on the market and the company. The market is dedicated to a permanent condition site for the product they choose by the process that the consumer chooses. The result of this constant and detailed vote is the cost that will be returned to a company that should be taken (the price paid by the production factors is again price), and, as expressed, determines what you need to provide changing needs constantly of consumers. In the price. If the price provided is greater, there is a profit margin. If the increases of profit margin, companies (or producers and entrepreneurs) increase production, and vice versa. In this sense, the motivation of benefits is the regulatory principle that works by the mechanism. These forms can be explained as follows: (i) Specific collective desires are not suitable for expression, for example, the need for defense, public health education, the development of atomic energy, etc. If state interventions 160 CU IDOL SELF LEARNING MATERIAL (SLM)

that cannot be expressed particularly intended to meet these specific needs, they are generally not considered economic plans. (ii) To satisfy previous collective things, it is possible to provide a fixed price to attract resources in competition with other economic units. This works through the mechanism and does not include plans. (iii) State may intentionally operate specific prices to achieve specific results. Rates, changes in exchange rates, changes in banking rate: These can be considered economic planning. Some writers are planned only if such an operation is intended to affect the entire economy, for example, in the definition of Zweig. However, such limitations are not allowed by all economists. (IV) Finally, although basic economic decisions have not been made to refer to the price determined in the free market, certain conclusions are public institutions, public institutions, and the resulting intervention that I arrived at independently. In the interruption of price mechanism, it will fall within the scope of the economic plan. At this point, there is almost no controversy among most economists. 8.9 SUMMARY  Economic development is closely related to planning  Planned economy means an economic system in which the central government, the government, controlling and regulating production, distribution, prices, etc., decides in advance the actions, goals and strategies development strategy.  The price mechanism may be defined as an apparatus for arriving at economic decisions through a continuous process of choice exercised freely by individual consumers and producers in the market.  Prices play a significant role in the allocation of resources  State intervention in relation to the price mechanism may take 4 forms:  it may supplement the price-mechanism,  it may work through the price mechanism,  it may control the mechanism and finally  it may supplant it 161 CU IDOL SELF LEARNING MATERIAL (SLM)

8.10 KEYWORD  Economic Planning: the process by which the central government makes or influences key economic decisions.  Limited planning: Limited planning cannot concentrate on everything.  Administrative planning: It seeks to provide a broad framework for action because it defines the main goals, establishes inter-office policies, and links departmental policies and plans with relevant departments.  Labour force: the number of people in the population of working age who are, or wish to be, in work outside the household.  Economic surplus: the amount remaining after the costs involved in producing a country’s output (such as wages and cost of raw materials) are deducted from the value of the output produced 8.11 LEARNING ACTIVITY 1. Explain the meaning of planning ___________________________________________________________________________ ___________________________________________________________________________ 2. Discuss need of Planning ___________________________________________________________________________ ___________________________________________________________________________ 3. Write two objectives of planning ___________________________________________________________________________ ___________________________________________________________________________ 8.12 UNIT END QUESTIONS A. Descriptive Questions 162 Short Questions 1. Define the term Planning. 2. Discuss need of Planning. CU IDOL SELF LEARNING MATERIAL (SLM)

3. Explain the types of Planning 4. Explain how planning and development are related 5. Elaborate difficulties in development planning Long Questions 1. Explain the Meaning and Need of Planning 2. Explain Cox’s & Kings and its contribution to tourism industry 3. Explain various steps involved in plan formulation. 4. Explain Price Mechanism and Planning 5. What are different strategies in Planning 6. Discuss the achievements of economic planning in India. 7. Explain need and objectives of Planning B. Multiple Choice Questions 1. Economic planning refers to a. Allocation of resources b. Acquisition of taxes c. mobilisation of taxes d. the planning of resources 2. ________ are the resources that provide utility value to all other resources. a. Men b. Material c. Money d. Machinery 3. As an aid to development planning, much use is being made today of the input-output analysis. Who first used it a. W.W.Leontief b. W.A.Lewis c. H. Liebenstein d. A.O.Hirshman 163 CU IDOL SELF LEARNING MATERIAL (SLM)

4. Which of the following countries was faster in shifting its workforce from agriculture to the service sector? a. India b. Pakistan c. China d. Both (a) and (b) 5. It is a measure of economic development a. Increase in exports and imports b. Increase in working population c. Increase in national and per capita income d. and (c) of above 6. Which of the following steps in the planning process should be completed before the others can be addressed? a. Listing alternative ways of reaching objectives b. Growing population c. Putting plans into action d. Stating organizational objectives 7. Which of the following economists is of the view that “Demand for commodity is NOT demand for labour”? a. Ricardo b. Malthus c. J.S. Mill d. Adam Smith 8. What according to Malthus puts a stop to the growth process? 164 a. Inadequacy of capital accumulation b. Operation of diminishing returns in agriculture c. Rapid population growth d. Deficiency in effective demand CU IDOL SELF LEARNING MATERIAL (SLM)

9. ………….. is a situation in which it is not possible to make someone better off without making someone worse off a. Social efficiency b. Production c. Distribution d. Pareto 10. According to Michael Todaro and S. C. Smith, economic development is a _______________ process. a. Multidimensional b. Multi State c. Multinational d. Multilingual Answers 1-a, 2-a, 3-a, 4- b, 5-c, 6-d, 7- c, 8-d, 9- c, 10- a 8.13 REFERENCES References book  Jhingan, ML, The Economics of Development and Planning, Vrinda Publication.  Goel, R.L, Economic of Development and Planning.  Subrata (2003), Indian Reprint 2007, Introduction to Development Economics, Rout ledge, London & New York.  M. L. Seth, S. P. Singh : Economic Planning, Theory and Practice ; S. M. Chand and Company, New Delhi (1998)  A. N. Agarwal : Indian Economic Problems : Development and Planning, WishvaPrakashan, New Delhi (2003)  Dr. RavindraDoshi:Vikasanshil Bharat, PhadakePrakashan, Kolhapur.  .M. L. Jhingan : “The Economics of Development & Planning”, Konark Publishers PVT LTD, A- Main ViksMarg, Delhi - 110092 165 CU IDOL SELF LEARNING MATERIAL (SLM)