Economic Planning refers to any plans of economic activity which point to achieve specific social and economic outcomes. The planning mechanism involves the specific economic or social outcomes. The philosophy of planning is that only markets and price system cannot ensure the welfare of citizens. Apart from this there are economic requirements such as investment in infrastructure, investments in public goods such as transport & other public utility which are enjoyed by the society.
Types of Economic Planning
In today’s world, most economies are mixed economies. The planning can be of several types as discussed below:
Indicative Planning
- It puts forward / indicates to some broad principles and guidelines to achieve some goals. Not much specific particulars.
Comprehensive / Imperative Planning
- Refers to centralized planning and implementation with allocation of resources
- Used by socialist countries and each and every aspect of planning is controlled by state.
Structural Planning
- Aims to change the existing structures
Functional Planning
- Aims to achieve the objectives without making much changes to existing structural framework
Centralized Planning
- One central authority formulates plan, targets and priorities for all sectors. Also called Top bottom
Decentralized planning
- Multi-level planning in which more than one institutions work for implementation
Perspective Planning
- Refers to Long term planning 15-20-25 years. Implemented by breaking the plan period into smaller plans such as 5 years