Economic Planning
Types of Economic Planning Planning by Inducements
Planning by inducement is often referred to as
‘indicative planning’ or ‘market incentives’
. In such type of planning, the market is manipulated through incentives andinducements. Accordingly, in this system there is persuasion rather than compulsion or deliberate enforcement of orders. Here the consumers are free to consume whatsoever they like, producers are free to produce whatsoever they wish. But such freedom of consumption and production are subject to certain controls and regulations. Theconsumers, producers and other factors of production are induced with the help of variousfiscal and monetary devices. For example, if the planning authority wishes to boost the production of corn oil in Pakistan it will provide subsidies, tax holidays and loans to thefirms involved in production of corn oil. To encourage savings and investment anddiscourage consumption a suitable package of fiscal and monetary policies can beintroduced in the market. Therefore, the desirable results can be attained with the help of incentives and without the imposition of orders and instructions. Moreover, in such planning there is less sacrifice and less loss of liberty – economic as well as non-economic. Merits of Planning by Inducements:
(a)
Consumers’ sovereignty remain intact. Planning by inducements is moredemocratic as compare to planning by directions.
(b)
There is a freedom of choice of profession
.
(c)
In planning by inducements, there is freedom of enterprise
. Produces are free to produce whatever they like but within in the capacity of given rights.
(d)
Planning by inducements is smooth and flexible
. It is more popular because itenables to incorporate the changes in resources, technology and taste etc. evenafter the finalisation and implementation of plan.
(e)
Under this sort of planning, the inertia attached with standardisation can be put toan end and producers are free to produce in
Planning by inducement is often referred to as
‘indicative planning’ or ‘market incentives’
. In such type of planning, the market is manipulated through incentives andinducements. Accordingly, in this system there is persuasion rather than compulsion or deliberate enforcement of orders. Here the consumers are free to consume whatsoever they like, producers are free to produce whatsoever they wish. But such freedom of consumption and production are subject to certain controls and regulations. Theconsumers, producers and other factors of production are induced with the help of variousfiscal and monetary devices. For example, if the planning authority wishes to boost the production of corn oil in Pakistan it will provide subsidies, tax holidays and loans to thefirms involved in production of corn oil. To encourage savings and investment anddiscourage consumption a suitable package of fiscal and monetary policies can beintroduced in the market. Therefore, the desirable results can be attained with the help of incentives and without the imposition of orders and instructions. Moreover, in such planning there is less sacrifice and less loss of liberty – economic as well as non-economic. Merits of Planning by Inducements:
(a)
Consumers’ sovereignty remain intact. Planning by inducements is moredemocratic as compare to planning by directions.
(b)
There is a freedom of choice of profession
.
(c)
In planning by inducements, there is freedom of enterprise
. Produces are free to produce whatever they like but within in the capacity of given rights.
(d)
Planning by inducements is smooth and flexible
. It is more popular because itenables to incorporate the changes in resources, technology and taste etc. evenafter the finalisation and implementation of plan.
(e)
Under this sort of planning, the inertia attached with standardisation can be put toan end and producers are free to produce in