Economic Plan | Meaning | Features | Need | Types

What is an Economic Plan?

An economic plan is an outline of schemes designed to achieve certain pre-determined economic objectives, in a particular order of priorities within a specified period of time. This is the technique that a state follows to achieve economic development.

Economic Planning - Meaning, Features, Need, Types
Economic Planning – Meaning, Features, Need, Types

The economy, which makes efforts to achieve development through economic plans, is known as planned economy.

Aims of Economic Plan

The aims of economic planning are –

  1. improving the economic system,
  2. making the social and moral upliftment of the people, and
  3. strengthening the country’ from the political point of view.

At present, economic planning is adopted by almost all economies of the world in some form or the other so as to remove vicious circle of poverty. India has accepted economic planning for its Central and State Governments.

Features of Economic Plan

The main features of economic planning are as follows:

1. Determining the objectives that are to be achieved.

2. Estimating the resources that are available in the country.

3. Determining the order in which the objectives are to be achieved.

4. Designing suitable schemes for realizing of the objectives.

5. Determining the plan outlay and investment.

6. Allocation of resources between different sectors as per the priority of objectives

7. Establishing a body for the formulation, organization and appraisal of the plans

Need for Economic Plan

The factors, which emphasis the need for economic planning in India, are as follows:

1. To attain steady economic development in a free market economy.

2. To remove unemployment, poverty and inequalities among people.

3. To provide infrastructural facilities such as banking, power, water, transport and communications.

4. To allocate resources properly between present and future needs.

5. To attain balanced regional development.

Types of Economic Plan

Economic planning can be divided into four types such as-

1. Perspective Plans: Perspective plan is a long-term plan. Generally, it is formulated for a period ranging from 15 years to 20 years.

2. Five-year Plans: Five-years plans as their name indicate are designed for a period of five years. It is an integral part of perspective plan.

3. Annual Plans: Annual plan is a part of five-year plan. It is prepared year-wise. So for each five-year plan, five annual plans will be prepared in a detailed manner.

4. Rolling Plans: Rolling plans do not have a fixed period of time. These plans have only duration and move forward. As it moves forward the year, which was completed, is deleted and one year is added at the end.