The Relevance of Planning in the 21st Century India
The Way Forward
- All this is not to say, however, that the planning methodology should not change so as to reflect the new economic realities and the emerging requirements. It has, it must, and it will.
- First of all, the – inter-sectoral balancing and indicative planning, at least in the sense of working out the optimal investment programme, which has been the center-piece of Indian planning since the Second Plan, will continue to remain important in the foreseeable future.
- Despite the much greater openness of the Indian economy, our very size and diversity will ensure that imports will continue to play a relatively small role in the economy, except in a very few products. Thus, the requirement of planning in estimating the sectoral investment needs will remain.
- A more important conceptual issue relates to the nature of the planning problem itself. In a controlled or directed economy, it is only necessary to work out a feasible path from the initial condition to the target. However, in a largely market economy this is not sufficient. Although working out the traditional feasible path continues to be necessary, it needs to be complemented by an assessment of the path the economy is likely to take on a business-as-usual basis.
- The planning problem then is how to move from the projected path to the desired. Thus, in addition to the standard planning model, there is a need to have two other models: (a) a projection model; and (b) a model which adequately captures the effect of policy measures on key parameters.
