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Topics Economic Planning India Economic
Reform Structural adjustment programmer
business environment
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Introduction Economic Planning is the making of
major economic decisions. What and how is to be
produced and to whom it is to be allocated by
the conscious decision of a determinate
authority, on the basis of a comprehensive survey
of the economic system as a whole.
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In an economy like India, the basis socioeconomic
problems like poverty, unemployment, stagnation
in agricultural and industrial production and
inequality in the distribution of income and
wealth can hardly be solved within the framework
of an unplanned economy planning is required to
remove these basic problem.
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Increase Employment
Economic Development
Self- Sufficient
Objectives
 Economic Stability
To Reduce Economic Inequalities
Social Welfare and Services
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Objectives 1. Economic Development The main
objective of Indian planning is to achieve the
goal of economic development economic development
is necessary for under developed countries
because they can solve the problems of general
poverty, unemployment and backwardness through
it. Economic development is concerned with the
increase in per capita income and causes behind
this increase.
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• In order to calculate the economic development of
  a country, we should take into consideration not
  only increase in its total production capacity
  and consumption but also increase in its
  population. Economic development refers to the
  raising of the people from Inhuman elements like
  poverty unemployment and ill heath etc.

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• 2. Increase Employment
• Another objective of the plans is better
  utilization of man power resource and increasing
  employment opportunities.
• 3. Self-Sufficient
• It has been the objective of the plans that the
  country becomes self-sufficient regarding food
  grains and industrial raw material like iron and
  steel etc.
• Also, growth is to be self sustained for which
  rates of saving and investment are to be raised.

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• 4. Economic Stability
• Stability is as important as growth. It implies
  absence of frequent end excessive occurrence of
  inflation and deflation.
• If the price level rises very high or falls very
  low, many types of structural imbalances are
  created in the economy.
• 5. Social Welfare and Services
• The objective of the five year plans has been to
  promote labour welfare, economic development of
  backward classes and social welfare of the poor
  people.

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• Development of social services like education,
  health, technical education, scientific
  advancement etc. has also been the objective of
  the Plans.
• 6. To Reduce Economic Inequalities
• Every Plan has aimed at reducing economic
  inequalities. Economic inequalities are
  indicative of exploitation and injustice in the
  country. It results in making the rich richer and
  the poor poorer.

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7. Social Justice Another objective of every
plan has been to promote social justice. It is
possible in two ways, one is to reduce the
poverty of the poorest section of the society and
the other is to reduce the inequalities of wealth
and income.
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• India's Economic Reforms. The reform process in
  India was initiated with the aim of accelerating
  the pace of economic growth and eradication of
  poverty.
• 7 Major Steps of Economic Reforms Taken by
  Government of India
• New Industrial Policy
• Under Industrial Policy, keeping in view the
  priorities of the country and its economic
  development, the roles of the public and private
  sectors are clearly decided.

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• A great reduction has been effected in the role
  of the public sector.
• Efforts have been made to encourage foreign
  investment. Investment decision by companies has
  been facilitated by ending restrictions imposed
  by the MRTP Act.
• Similarly, Foreign Exchange Regulation Act
  (FERA) has been replaced with Foreign Exchange
  Management Act (FEMA).

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Abolition of Licensing
Abolition of Licensing
 Freedom to Import Technology
New Industrial Policy
Contraction of Public Sector
Contraction of Public Sector
Free Entry of Foreign Investment
FERA Restrictions Removed
MRTP Restrictions Removed
MRTP Restrictions Removed
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(2) New Trade Policy Trade policy means the
policy through which the foreign trade is
controlled and regulated. As a result of
liberalisation, trade policy has undergone
tremendous changes. Especially the foreign trade
has been freed from the unnecessary controls.
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Abolition of Licensing
Reduction in Restrictions of Export-Import
Reduction in Export-Import Tax
New Trade Policy
Contraction of Public Sector
Establishment of Foreign Capital Market
Easy Procedure of Export-Import
Providing Incentive for Export
MRTP Restrictions Removed
Full Convertibility on Current Account
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(3) Fiscal Reforms The policy of the government
connected with the income and expenditure is
called fiscal policy. The greatest problem
confronting the Indian government is excessive
fiscal deficit. In 1990-91, the fiscal deficit
was 8 of the GDP. (It is important to understand
the meaning of fiscal deficit and GDP.)
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(4) Monetary Reforms Monetary policy is a sort of
control policy through which the central bank
controls the supply of money with a view to
achieving the objectives of the general economic
policy. Reforms in this policy are called
monetary reforms.
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(5) Capital Market Reforms The market in which
securities are sold and bought is known as the
capital market. The reforms connected with it are
known as capital market reforms. This market is
the pivot of the economy of a country.
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(6) Phasing out Subsidies Cash Compensatory
Support (CCS) which was earlier given as export
subsidy has been stopped. CCS can be understood
with the help of an example. If an exporter wants
to import some raw material which is available
abroad for 100, but the same material is
available in India for 120 and the governments
wants the raw material to be purchased by the
exporter
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(7) Dismantling Price Control The government has
taken steps to remove price control in case of
many products. (Price Control means that the
companies will sell goods at the prices
determined by the government.) The efforts to
remove price control were mostly in respect of
fertilizers, steel and iron and petro products.
Restrictions on the import of these products have
also been removed.
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Liberalization (or liberalisation) is a
relaxation of government restrictions, usually in
such areas of social, political and economic
policy. Economic liberalization is often
associated with privatization, which is the
process of transferring ownership or outsourcing
of a business, enterprise, agency, public service
or public property from the public sector to the
private sector.
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Structural adjustment programmer (SAPs) consist
of loans provided by the internationalMonetary
fund  (IMF) and the world bank (WB) to countries
that experienced economic crises. SAPs are
created with the goal of reducing the borrowing
country's fiscal imbalancees  in the short and
medium term or in order to adjust the economy to
long-term growth. The bank from which a borrowing
country receives its loan depends upon the type
of necessity.
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• The IMF usually implements stabilization policies
  and the WB is in charge of adjustment measures.
• Long-term adjustment policies usually include
• liberalisation of markets to guarantee a price
  mechanism
• Privatization, or divestiture, of all or part of
  state-owned enterprises
• creating new financial institutions
• improving governance and fighting corruption

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• Criticisms of Structural Adjustment
• Loss of National Sovreignty
• IMF policies need to be implemented otherwise
  there can be heavy financial penalty. This gives
  foreign bodies great influence over key economic
  issues in developing economies.
• Greater inequality
• Structural adjustment policies have often shown
  a tendency to greater inequality. For example,
  Privatisation has often benefitted a small rich
  elite (e.g. Russia 1995) and have not benefitted
  wider population.

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• Ignore Social Benefits
• Privatisation of key public utilities like Water
  (e.g. Bolivia) have led to higher prices for a
  key commodity. Arguably market incentives dont
  have same importance when the industry plays an
  important social welfare function. But, S.A.
  policies have often stuck to a certain ideology
  even when not appropriate.
• Social Development Ignored
• To meet fiscal criteria, governments have often
  cut welfare spending programs which benefit the
  poorest members of society.

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