Top 3 Objectives of Economic Planning

The collapse of popular faith in laissez-faire has led to the popularity of planning in the word arena.

After second world war, it has been accepted as a part and parcel of national economic policy. Prof. Robbins considered it as a good panacea of our age.

Precisely, objective of economic planning largely depend on the nature of social, economic and political environment prevalent in a country at a specific time.

The objectives of economic planning can be classified into there main categories:

(i) Political,

(ii) Economic and

(iii) Social and Ethical.

I. Political Objectives:

The political objectives include:

(a) Defence,

(b) Offence and

(c) Peace.

They are discussed as below:

Defence:

‘Defence’ had been a very important and core factor of planning, and it still remains one of the most important objectives of planned developments. Many other objectives are simply supplementary objective to this goal. There is no second opinion to say that defence itself had been a necessary outcome of other objectives. But the fact is that has became a primary objective of economic planning.

Offence:

To achieve superiority of power or to expand the territories of nation or to make use of natural resources available in other regions, the offensive attitude of different countries led to plan their economies accordingly. Germany during Hitler’s regime adopted such policies, the purposes being depriving the Jews of their rights in favour of German people. Japan did the same in North and Central China to exploit the natural resources of that region. At present several nations are involved in similar types of strategic planning of their economies with ‘offence’ as the basic objective.

Peace:

This objective occupies a dominant place of well being of the people of the nation. This type of planning is based on the assurance of collaboration of many nations on an organized basis particularly through some common agency or an institution. This type of planning is being adopted at international level also.

II. Economic Objectives:

1. Rapid Economic Development:

Rapid economic development of an underdeveloped country is a foremost objective. In the words of Prof. D. R. Gadgil, the problem of the rapid economic development of underdeveloped areas of the world, has assumed great importance.

The vicious circle of poverty can only be broken by the rapid development in agriculture, industry and infrastructures. It is thus, through economic planning that an underdeveloped country can break these bottlenecks and in turn increase national income and improve the living standard of the poor lots.

2. Proper Utilization of Natural Resources:

In an unplanned economy, natural resources are underutilized, misutilised and wasted. Therefore, in an underdeveloped economy, concrete action is necessitated for making the use of natural resources for production purpose and .it is state which implements through economic planning. Prof. Cole has pointed out that real planning involves the control of the money machine and the adoption of monetary policy makes possible the full use of the available resources of production. ‘

3. To Provide additional Employment:

Another crucial objective of economic planning is to create additional employment opportunities in advanced as well as under-developed countries. In developed countries, there is frictional type of unemployment which is caused by the depression. On the other hand, chronic unemployment due to lack of development activities, is the common feature of underdeveloped countries. Thus the main aim of economic planning in developed countries is to control fluctuations. Economic planning is needed to create stable conditions of employment in less developed countries.

4. To Reduce inequalities in the Distribution of Income and Wealth:

In poor and less developed countries, there exists inequalities and disparities in income and wealth. There is a great gulf between the poor and rich which is a threat to the sovereignty of a nation. Thus, distributive justice becomes and indispensable one by removing economic inequalities and disparities through adopting effective monetary, fiscal and other development activities.

With this view, economic planning is a tool to overcome such shortcomings and creating a conducive atmosphere for economic development. In this way, economic planning ensures equitable distribution of the benefits among different sections of the people of an underdeveloped economy.

5. Economic Stability:

In a planned economy, the development of one sector is co-ordinated in such a way with other sector to that a balanced and smooth development may take place. Similarly, there are less chances of occasional fluctuation and uncertainty which affects development adversely. Thus economic planning is a green signal to economic stability and prosperity of a country.

6. Price Stability:

To attain stability in the price level is also other vital objective of economic planning. The occurrence of trade cycles has been associated with capitalism which is full of severe evils. This paralyses the entire productive structure of an economy. Economic planning is the only effective alternative for this evil of capitalism. In fact, economic planning minimizes the fear of trade cycles and progress with stability is stimulated.

7. More Farsightedness:

Economic planning is a slow but gradual process which keeps a close awareness all-round. It foresees the difficulties which an economy is likely to face in the future. In a planned economy central authority takes account of shortage of raw material and wastage of natural resources. But the private entrepreneurs continuously ignore these possibilities. In this regard, planned economy is more farsighted which not only looks and present benefits but are also concerned for the future.

8. Rapid Capital Formation:

The less developed countries have the basic problem of less capital formation. Prof. Nurkse has stated in his book ‘Problem of Capital Formation in Underdeveloped Countries’ that the main cause of poverty is low rate of capital formation and they are needed for a large scale accumulation of capital.

III. Social Objectives:

1. Social Justice:

Another major objective of planning is to provide social justice to the common man and weaker section of the society. In India, vast’ disparities in income and wealth distribution is a common feature. Our planners have pledged to the establishment of ‘democratic socialism’ and ‘socialistic pattern of society’. This society refers to a system based on equality where minimum needs of the common masses are fulfilled and further more, there is no exploitation of man by man.

Social Security:

It has become an important objective in modern time. It refers to the provision of welfare facilities along with fair wages and full employment. The people of the country should have sufficient accommodation, healthy atmosphere, medical facilities and facilities of recreation and library etc. Such programmes are adopted on very large scale, during post-War or during developing periods to achieve social as well as economic goals.

Social Equality:

This objective of planning is of recent origin. This is greatly influenced by the planning of many countries. This approach has some ethics and philosophy and has emotional reasons of resentment and sense of justice behind it. It leads to idealism of social structure.

It is generally found that whenever inequalities of incomes and opportunities create large social inequalities and results into an increase of poverty, a feeling of resentment develops and people want to attain equality. Through economic planning the state adopts necessary measures to attain social and economic equality so as to maintain p^ace and law and order in the country.