Special Case for Planning in Underdeveloped Countries

Special Case for Planning in Underdeveloped Countries Economic planning has a specially strong case for the under-developed economies. In their case it is not merely necessary to maintain the country's economy in sound health and to ensure a rational and

Special Case for Planning in Underdeveloped Countries

Economic planning has a specially strong case for the under-developed economies. In their case it is not merely necessary to maintain the country's economy in sound health and to ensure a rational and optimum use of the community's resources but also to speed up economic development. They are lagging behind in the race and they are keen to catch up with the advanced economies or at any rate reduce dependence on them as fast as possible. Their impatience for accelerating economic development leads inevitably to economic planning. The achievements of the Russian and Chinese economies under the impulse of planning serve as an example.

Private enterprise in under-developed countries like India has not taken India any far on the road to economic progress. It has left untouched and underdeveloped some vital sectors of the Indian economy. The entrepreneurial ability is lacking in India or exists only in an insufficient measure. Indian entrepreneurs take up hackneyed lines and give no evidence of innovation. They are more intent on get-rich-quick methods and pursue speculative profits rather than long-term industrial development. They have been attracted more by commerce than by industry. In such countries, it becomes necessary for the State to intervene and provide the right type of entrepreneurship to bring about economic development.

Capital formation and skill formation are of crucial importance for any stage of economic development. These two determinants of economic growth have a very tardy and unsatisfactory development in backward and under­developed economies. Planning is essential to build up these necessary elements of productive power. Planning authority can launch a vigorous saving drive and control and guide investment of the mobilized resources in the desired channels. Normally in backward countries, rich people prefer investment in land, housing property and jewellery. This sort of investment is no good for speedy economic development. That is why our government has come hard upon the gold hoardings. Drastic measures have to be taken to take over hoarded wealth lying mi productively in lockers and private hoards in order to help capital formation. This can only be done under planning.

The need for planning in underdeveloped countries is further stressed by 11 it- necessity of removing widespread unemployment. Capital being scarce and labor being abundant, the problem of providing gainful employment oppor­tunities lo an ever-increasing labor force is a difficult one. Only a centrally planned economy can hope to solve this.

Planning is also desired for the balanced development of the underdeve­loped economies, for rapid economic development underdeveloped countries require a harmonious growth of agricultural and industrial sectors, the establishment of social and economic overheads, and the expansion of the domestic and foreign trade sectors, so that they move ahead in unison. All this requires a frontal attack of simultaneous investment in different sectors, which is possible only under development planning.

Disguised unemployment' which is a special feature of an underdeveloped economy is another source that can also be tapped. We have surplus labor in agriculture which represents disguised unemployment. They can be withdrawn I from agriculture and put in more productive employment

The state in an under-developed country can also resort to deficit financing and thus increase the financial resources available for economic development. Even then foreign aid may become necessary. For planned economic development foreign aid is readily made available. A country which has no plan and which may rightly be considered as going nowhere cannot hope to secure foreign financial assistance. These are a few measures by means of which financial resources of a country can be built up under planning.

Glaring inequalities of wealth and income and of economic opportunities is another painful feature of under-developed countries. These inequalities can also be reduced through planning.

The demographic factor is another hindrance in backward countries which can also be overcome by planning. A country with rapidly increasing population must run fast in order to keep its present position. Increase in national wealth is swallowed up by still many more mouths. There is no escape from planning in such countries.

The socio-religious attitudes of the people also call for an effective state action to make them act in a more rational manner. It is well-known that social and religious institutions of India have hindered economic growth in the past. A planned programme is essential to neutralize the adverse effects of such obsolete notions and institutions.

The paucity of trained, competent and honest administrators in backward countries has also to be made up and calls for a planned endeavor.

These are some of the special problems which an under-developed country has to tackle. It is now already realized and universally admitted that these problems can be effectively tackled by planning and by planning alone.


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