Submitted By: Roll No Muhammad Zubair 7451 Umer Raza 7490 Farhan 7452 Haq Nawaz 7464 Sohail 7453 There was no concept of economic planning before the 20th century First time; Soviet Union introduced the idea of economic planning in 1928. At the time of great depression of 1930 J, M, Keynes also realizes the nations about the importance of economic planning. In Pakistan, just after independence in 1948, for economic planning a development Board was setup.
Planning is a technique, a means to an end being the realization of
certain predetermined and well-defined aims and objectives lay down by a central planning authority. The end may to achieve economic, social, political or military objectives. Definition of economic planning Definition of economic planning (con’t) The concept of economic planning has obtained greater Importance after the World War II, Now the question is why do we need economic, planning and what role does it play in the process of economic development of a Country. Planning is required to initiate and speed up the process of economic development in under development countries. The UDCs are caught up in the vicious circle of poverty. Only with economic planning they would be able to break the vicious circle of poverty are accelerate the tempo of their economic development. Commodity and factor markets are often badly organized and the existence of distorted prices means that producers and consumers responding economic signals and incentives. Therefore, the government has an important role to play integrating markets and modifying prices. The private enterprise cannot easily mobilize sufficient financial resources needed for development purposes. The Govt is in a far better position to find the necessary resources through taxation, borrowing and deficit financing. Therefore, for the utilization and mobilization of such resources the Govt must plan. The structural changes are desirable because of the following factors: To modernize the economy To make the industrial sector foundation and back bone of the economy To pace the capital accumulation in the economy The developing country’s often desire to change the structure of their economy. TO REMOVE GENERAL POVERTY
In Pakistan 23.9% population is very poor population.
To remove the poverty, effective economic planning is needed. Planning authority should make such plans, which are helpful to provide more jobs to quickly growing population. While making the plan, planning commission must concentrate to remove the general as well as absolute poverty. TO ACHIEVE SELF SUFFICIENCY
Today, self-sufficiency is the most important
need of developing countries. Through development planning dependence on the foreign debts an resources can be check. A country with the help of economic planning can install import substitution and exports led industries. To control inflation
• Valuable economic planning is also needed to
control inflation. Due to inflation there is reduction in purchasing power that caused to reduce the saving and investment. Economic planning is very useful to control very high and harmful inflation. In Pakistan rate of inflation is 7.9%. There are same social Costs that we have to pay indirectly, no doubt in an industrial area there is improvement in infrastructure and living standard but on the other hand due to industrial wastage there is air and water pollution, industrial diseases and industrial accidents etc. Through economic planning treatment plants must be install minimize the social cost. To control artificial shortages To improve literacy rate
To, improve literacy rate, economic planning’s also
required. In developing countries like Pakistan low literacy rate is 63 % that is almost 100% in advanced countries. Through economic planning literacy rate can be improve which leads to develop the efficiency, of labour and improvement in the quality and quantity of goods and services. To eliminate instabilities
• In under developed countries, economies are
unstable. Sometime, private, enterprise, itself .creates trade cycles, unemployment and fluctuation in price level. All these are harmful for a country. Through development economic planning undesirable fluctuations can be check to make economic development. TO MAINTAIN POLITICAL STABILITY
There is interdependence among various sectors
of, an economy. Development economic planning is also helpful to maintain political stability. Political stability is necessary for inflow of foreign investment and economic development that can achieve through economic planning. To remove disparities
There are a lot of regional disparities & and income
disparities, which can be, remove through economic planning, reduction of inequalities, income, wealth, regions and economic opportunities are the major aims of a modern welfare state. All these aims can achieve with the help of economic planning. In developing countries, there is no regard for labour. Industrialist highly exploits the labour with hard work and low wage rate. Through economic planning protection of labour is possible. A planning authority must take step to regulate the economic development that its results will reach to the labour also. Developed infrastructure LONG TERM ECONOMIC GROWTH
The objective of, economic planning is to achieve
the long-term economic growth. Economic growth and development is required for the progress and prosperity of country. Long term sustainable economic growth is impossible without economic planning. Creation of major economic changes
In developing countries there is need for some
major economic changes. These changes are the symbol of economic development. Economic planning is required for the change in the structure of various sectors of economy, international trade and urban & rural life styles. Similarly, economic planning is needed to start some major projects. To expand domestic and foreign trade
The expansion of the domestic and foreign
trade requires not only the development of agriculture and industrial sectors along with socials and economic over heads but also the financial institutions. This problem is solved only by the economic planning and can regulate the domestic and foreign trade in the best interest of the country. To protect worker's interests
A planning can step into so regulate the economic
growth of the country as to ensure to the actual workers the fruits of their labour. The state is a more, effective guardian of labour rights than self adjusting and automatic economic forces. To correct terms of trade
• It is the planning alone which can ensure that the terms of
trade remains favorable to a country. Foreign trade must plan, if fruits of economic development are not to thrown away. This aspect has been paid special attention by planners every where. To eliminate the wasteful competition
At any rate, there is nothing in the market
mechanism that establishes competition. The market economy can also be helped to function adequately with the positive support of the planning authority. PROPER COORDINATION
Only a planned economy provides proper
coordination and avoids unnecessary duplication of staff and equipment. A planning authority can take farsighted, decisions and produce a balance economy. To prevent artificial shortage To eliminate social cost
By planning it is possible to eliminate
social costs which usually take the farm of industrial diseases, accidents, over crowding, in-sanitary conditions and cyclical unemployment. These social costs are by products of capitalism. These are mitigated by economic planning. Industrial development
Without industrial development no
country can make progress. Planning is necessary for the establishment of new industries. We can find this objective in various plans of Pakistan. Population control
• When the size of population is greater
than the size of national resources, it becomes dangerous for the economy. So population can be controlled with effective planning. Social welfare programs
• Another objective of the planning is to
introduce the social welfare programs. In Pakistan, during 8th five year plan various facilities like housing, schooling, transporting and water were provided to the people. With such facilities a country can make progress. Self Self sufficiency sufficiency in in food food
• Self sufficiency in food provides a sound
and solid base for the economy. So this objective can be achieved through planning in the 8th five year plan the target is proposed for the agriculture sector. Elimination of regional disparity
• With planning, the regional economic
disparity can be removed. In plan special funds are allocated for the development of back ward areas. Conclusion
• Today, economic planning is playing a very
important role in the economic development of a country. With the help of economic planning, objectives and targets are formulated and then resources are mobilized to achieve the fixed targets. Accordingly, there is no concept of development without successful economic planning. HOW CAN WE MAKE ECONOMIC PLANNING & POLICIES PRACTICALLY IMPLEMENTABLE? We can make Economic Planning & Policies Practically Implementable with having…! Realistic goals of the plan Appropriate policies and instruments Adequate information Rational institutions Suitable administrative and technical apparatus Public co-operation Planning commission
The planning commission should be
setup which should be organized in a proper way. It should be divided into number of divisions and sub-divisions under such exports as economists, statisticians, engineers etc. Statistical data • A survey is essential for the collection, of statistical data and information with regard to the total available material capital and human resources of the country. A central statistical organization should be set up with a work of statistical bureau for collecting statistical data and information. Objectives
• The plan may lay down some objectives
such as increase in national income and per capita income, to provide employment opportunities, to reduce inequalities, to raise production, self reliance, etc. The various objectives should be realistic and flexible. The targets and priorities should be fixed sector wise and global in the plan. Global targets must be bold and cover the every aspect of the economy. They include the quantitative production targets. Global and sector targets should be mutually consistent in order to the required growth rate of the economy. Mobilization of resources
• There are various internal and external resources
for financing a plan. Savings, profits, borrowings, taxation and deficit financing are the principal internal resources of finance for the public sector. At the same time, they should encourage corporate and individual savings of the private sector. Balanced plan
There should be balance between
saving and the investment, between the available supplies of goods and the demand for them, between the demand for imports and the available foreign exchange etc. Incorrupt and efficient administration
• A strong, efficient and incorrupt
administration is required for the success of planning. But this is what an underdeveloped country lacks the, most competent administrative staff which should be appointed in various departments which should first prepare good feasibility reports of proposed projects before starting them. Economies in administration
• Every effort should be made to effect
economies in administration particularly, in the expansion of ministries and state departments. The people must feel confident that every pie that they pay to the government through taxation and borrowing is properly spends for their welfare and development. Educational base
An educational base is essential for
a clean and efficient administration. Planning must take care of the ethical and moral standards of the people. This is not possible unless a strong educational base is built up. A theory of consumption
Under developed countries should not
follow the consumption pattern of the more developed countries. The theory of consumption should be democratic and prime attention must be given to goods that are within the range of the model income that can be purchased by the typical family. Public cooperation
• Public cooperation is considered to
be one of the important levers for the success of the plan in a democratic country. Economic planning should be above party politics but it should have the approval of all the parties. The plan should be regarded as a national plan when it is approved by the representatives of the people. For a clean and efficient administration, a solid educational base is essential. Planning to be successful must take care of the ethical and moral standards of the people. Higher education is needed to prepare useful plan. Without creating honest and efficient human beings in the country it would not be feasible to undertake economic planning on a big scale. We conclude that all-above points are necessary to formulate the successful plan. Government should first set the targets of plan and then through mobilization of resources operate the plan to success and desirable results.