CAPF-AC (Assistant Commandant) Exam Study Material : Indian Economy - Planning in India
CAPF-AC (Assistant Commandant) Exam Study Material : Indian Economy - Planning in India
Indian Economy
Planning in India
Economic Planning
Economic planning is a process under which a central authority (like Planning Commission in India) defines a set of targets (related to growth and development of the country) to be achieved within a specified period of time, keeping in view the needs and means of the country. It refers to a system under which a central planning authority sets a set of targets and specifies as set of programmes and policies to achieve those targets within the specified period of time.
Capitalism, Socialism and a Mixed Economy
Let us have and understanding of concepts of Capitalism, Socialism and Mixed economy. This will help us in having a comprehensive view of goals and objective of planning, particularly in the context of the Indian economy.
Capitalism
It is an economic system in which major economic decisions
- what goods and services are to be produced,
- how goods and services are to be produced, and
- how goods and services are to be distributed are left to the free play of the market forces, or the forces of supply and demand. There is a private ownership of the means of production, and all economic decisions are taken with a view to maximizing profits.
To illustrate:
- only those goods and services will be produced for which there is high demand in the market, offering high profits,
- goods will be produced using such a mix of the factors of production, that minimizes the cost of production, and
- goods and services will get distributed according to purchasing power of the households. Buy as much as you are able to; nothing if not able to.
Merit of Capitalism: The principle merit of this system is that if fosters self-interest, and accordingly accelerates the pace of economic growth. Demerit of Capitalism: The principal demerit is that is overlook the collective interest or social interest and leaves poorer sections of the society at the mercy of market forces of supply and demand.