Question

Define or explain the concepts.

1. Economic planning

2. Capital formation

3. Self- reliance

4. Planning Commission in India.

Answer 1

1. Economic planning refers to the framing of time-bound programmes to attain certain objectives. Every economy faces the scarcity of financial or natural resources. Economic planning aims at optimising the use of available natural, human and capital resources in order to fulfill the necessary social and economic objectives. In the words of Dr. H. D. Dickson, ‘Economic planning is the making of major economic decisions such as what and how much to be produced, when and where to be produced, to whom it is to be allocated and so on.’

2. Capital formation refers to the creation or development of capital assets such as machinery, buildings and infrastructure, such as roads, railways and bridges. The formation of capital assets is a pre-requisite condition for the growth and development of every economy, as it adds to social and economic welfare. Thus, every economy should aim at increasing the rate of capital formation.

3. Self-reliance implies being dependent or reliant on oneself and not others. From the perspective of India’s economy, self-reliance implies primarily consuming the products that are produced within the country. For instance, to be self-reliant in food grains, the agricultural sector needs to be given high importance. This also requires discouraging the imports of those goods that can be produced domestically. Achieving self-reliance is of prime importance to reduce a country’s dependence on foreign products.

4. The Planning Commission is a non-statutory body responsible for economic planning in India. The commission consists of experts from all the fields and is headed by the Prime Minister as its ex-officio chairman. The Planning Commission was established in 1950 to undertake comprehensive economic planning under the government’s supervision, wherein the public sector would lay down the basic economic framework and would encourage the private sector to actively contribute towards economic growth.