Economic Economic planning in planning in

PakistanPakistan

Centralized

Decentralized

I. The entire planning process is under a centralized planning authority.

II. The authority formulates a central plan, fixes objectives, targets and priorities of every sector of economy.

III. It takes all decision in accordance with the goals and target of the plan.

I. Refers to the execution of plan grass roots.

II. A plan is formulated by the central planning authority in consultation with the different administrative units of the country.

III. It provides freedom and flexibility to the economy.

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By Direction

By -Induceme

ntI. Planning by direction is an integral part of socialist society.

II. There is one central authority which plans, directs and order the execution of the plan in accordance with predetermined targets and priorities.

III. Through it Price control concept is introduced.

I. Planning by inducement is a democratic planning.

II. There is freedom of production and consumption. But these freedom are subject to state control and regulation.

III. Production is encouraged by subsidizing the firm.

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Financial Physical

I. It is the main key to economic planning.

II. Financial planning refers to the technique of planning in which resources are allocated in term of money.

I. Physical planning refers to allocation of resources in terms of men, material and machinery.

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Perspective Annual

I. Perspective planning refers to long term planning.

II. Long range targets are set in advance for a period 15, 20 or 25 years.

III. It does not imply one plan for the entire period.

IV. In reality broader objectives are to be achieved by dividing the perspective plan into several short period plans

I. The period for annual planning is only for one year.

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Indicative ImperativeI. Indicative planning is

a peculiar to the mixed economy of France.

II. The public and private sectors work together .

III. The state controls the private sector in a number of ways to fulfill the priorities of plan.

IV. The usual methods to control are licenses, quotas, price and quantity determination of products financial aids etc.

I. Under imperative planning all economic activities and resources operate under the direction of the state.

II. There is complete control over the factors of production by state.

III. There is no consumer sovereignty in such plan.

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Prepared by: Jamshaid JEEMI

Democratic

Totalitarian

I. In democratic planning the philosophy of democratic government is accepted as the ideological basis.

I. In totalitarian planning there is central and direction of all economic activities in accordance with a single plan.

II. The planning authority is the supreme body.

III. It decides about the targets, schemes, allocation, methods & procedure of implementation of plan.

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Planning an a Mixed Economy

I. It is a system which is free from the evils of both Capitalism and Socialism but integrates the good features of both.

II. It divides economy into public and private sectors.

III. To protect both consumer and producer the state passes labor laws and fixes minimum wages, working hours etc.

IV. And provides social security in the form of life insurance, unemployment insurance, pension provident fund, recreational facilities etc.

Need or Role Need or Role of of

Economic Economic planningplanning

Need or Role

planning is required to initiate and speed up the process of economic development.Only with proper planning we can accelerate the tempo of our economic development.

Rapid Development:

Allocation of Resources:The private enterprise cannot easily mobilize sufficient financial resources needed for development purposes.Government is in better far position to find the necessary resources through taxation, borrowing and deficit financing.

Need or Role

The Government intervention is necessary to solve the problems of unequal distribution of wealth.It is necessary to ensure the distribution of fruits of economic growth equally.

Reduction of inequalities:

Balanced Growth:There must be balanced growth between consumer goods industries and capital goods industries.Only by means of economic planning, balanced growth of al sectors and all industries can be ensured.

Need or Role

To overcome the price fluctuation the Government has to intervene. In the years of prosperity, Government should accumulate buffer stock which will be used in the period of starvation.In Pakistan this objective is taken by PASSCO.

Price stability:

Avoiding Business Cycles:

The private enterprises, if left free, would produce trade cycles, unemployment and misery.Economic planning helps largely to make business cycles less severe.

Need or Role

The main task of Government in under developed countries is to increase the rate domestic savings and investment to set up the rate of capital formation.It can be ensured through proper planning.

Capital formation:

Super decision:Planning is advocated on the ground that the decisions of the state are superior to that of the citizen.Therefore planning by collective action is required if a country is to develop economically on the right lines.

Need or Role

Only a planned economy provides proper coordination between all sectors of economy.And avoids unnecessary duplication of staff and equipment.

Proper coordination:

To Prevent Artificial Shortage:

A planed economy prevents artificial shortages being created by profit-greedy businessmen.The planning authority can smash the bad designs (agreements, market sharing etc.) by positive action in favor of the community.

Need or Role

It is the planning alone which can ensure that the terms of trade remains favorable to a country.This aspect has been paid special attention by planners every where.

To Correct the Terms of Trade:

To Remove Regional Disparity:

The economic planning is the only solution to the problems of regional disparity which can reallocate the resources efficiently among different sectors of economy.

Need or RoleTo Eliminate Social Costs:

By proper planning it is possible to eliminate social costs which usually take the farm of industrial diseases, accidents, overcrowding.Through a solid planning we can eliminate this factor.

Planning Machinery in

Pakistan

Development Board

Economic planning in Pakistan started in early 1948 with the establishment Development Board.The functions of the Board were to coordinate and make the periodical report to central cabinet.The Development Board in pursuance of the recommendations of Colombo Plan compiled a six year plan (1951-57) with expenditure of Rs.260 Crore.

Planning Board

The creation of planning board in 1953 marked the beginning of the next phase economic planning.Mr. Zahid Husain Ex-Governor State Bank of Pakistan was appointed as Chairman of planning board.Its implementations suffered due to rapid changes in Government and a lack of political support.

Planning Commission

The planning board was named as planning commission in 1957.In 1958 when the military government came into power Ayub Khan himself assumed the chairmanship of the planning commission.In 1972 planning commission was placed directly under the control of Ministry of Finance as a division.In early 80s, the Zia government took steps to revive the planning commission as an effective and authoritative economic decisions making body.

National Economic Council (NEC)

NEC is the supreme policy making body in the economic sphere. It has the president as Chairman, Federal Ministers as Incharge of economic affairs and Governors and Chief Ministers of the provinces, as members.NEC reviews the overall economic situation in the country.

Executive Committee of NEC (ECNEC)

It is headed by the Federal Minister of Finance.Its members are all Federal Ministers, Provincial Governors or their nominees.Its functions are:1.To set up development schemes and submit to NEC.2.To supervise the implementation of economic policies lay down by Cabinet and the NEC.

Annual Plan Coordination Committee (APCC)

It is purely advisory body responsible for advising the cabinet and NEC regarding the coordination of policies.It is headed by secretary general Finance planning and economic coordination.All federal secretaries of development ministries, heads of provincial planning development departments, heads of State Bank of Pakistan and the board of industrial management are its members.

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yyoouu Prepared by: Jamshaid JEEMI