Types of Planning in Less Developed Countries
Types of Planning in Less Developed Countries
Types of Planning in Less Developed Countries
PLANNING IN
DEVELOPING NATIONS
• Financial planning refers to the technique of planning in which resources are allocated in terms of
money
• Financial planning is essential in order to remove maladjustments between supplies and demand and
for calculating costs and benefits of the various projects.
• Thus, financial planning is thought to secure a balance between demands and supplies, avoid inflation
and bring about economic stability.
• Physical planning refers to the allocation of resources in terms of men, materials and machinery. In
physical planning, an overall assessment is made of the available real resources such as raw materials,
manpower, etc., and how they have to be obtained so that bottlenecks may be eliminated during the
plan.
• Physical planning requires the fixation of physical targets with regard to agricultural and industrial
production, socio- cultural and transportation services, consumption levels and in respect of
employment, income and investment levels of the economy.
• Physical planning has to be viewed as an overall long-term planning rather than a short-term piecemeal
planning.
3. Perspective Planning and Annual Planning
• Perspective planning refers to long-term planning in which long range targets are set in
advance for a period of 15, 20, or 25 years. A perspective plan, however, does not imply
one plan for the entire period of 15 or 20 years. In reality, the broader objectives and
targets are to be achieved within the specified period of time by dividing the perspective
plan into several short-period plans of 4, 5 or 6 years. Not only this, a five year plan is
further broken up into annual plans so that each annual plan fits into the broad framework
of the five-year plan. Plans of either kind are further divided into regional and sectoral
plans.
• Regional plans pertain to regions, districts and localities and sectoral plans pertain to
plans for agriculture, industry, foreign trade etc.
• Annual planning can also be incorporated into a budget which is made by a country
yearly
4. Indicative Planning and Imperative Planning
• This is the French system of planning which is based on the principle of decentralization in the
operation and execution of the national plans. This type of planning is not imperative but flexible. In
indicative planning the private sector is neither rigidly controlled nor directed to fulfil the targets and
priorities of the plan. Even then, the private sector is expected to fulfil the targets for the success of the
plan.
• The state provides all types of facilities to the private sector but does not direct it, rather indicates the
areas in which it can help in implementing the plan. On the other hand, under imperative planning all
economic activities and resources of the economy operate under the direction of the state.
• There is complete control over the factors of production by the state. The entire resources of the
country are used to the maximum in order to fulfil the targets of the plan. There is no consumers
sovereignty in such planning. Decisions about what and how much to produce are taken by the
managers of firms and factories on the directive of the planning commission or a central planning
authority. Since government policies and decisions are rigid, they cannot be changed easily.
5. Democratic Planning and Totalitarian Planning