Economic Planning-LPG Model of Development

Economic planning is the management of the economy of any country by the authorities of the management department. Economic planning consists of making decisions regarding the economy of the nations such as the allocation of the resources within the organisations that can enhance the growth of the nation. The authorities of the economy management are responsible for providing the number of resources to the organisation for their manufacturing so that the economic level of the country can be enhanced and the mechanism of resource allocation is known as economic planning.  

Define economic planning

     Economic planning is the mechanism of allocating resources to the country for their manufacturing and the resources are provided based on revenue given by the country. The revenue given by the      country can be beneficial for the growth of the economic condition of the nation. The planning of the economy consists of some policies that can help in resource allocation and help the country in earning more profit so that the economy of the nation can be enhanced. 

Different types of economic planning

Five types of economic planning are 

Planning by direction

The type of economic planning is planned by a certain authority that directs the planning through the observation of the previous priorities of the economy. The authority of this planning observes the market, business of different countries and previous levels of the economy so that they can direct effectively. The following type of economic planning is called the democratic form of economic planning because it consists of fewer complications. 

Indicative planning

The indicative planning is made based on decentralisation that helps in the operation and execution of plans. In this type of planning, the private sectors are not completely controlled or directed by the authorities of the government; however, the authorities expect that the private sectors fulfil the targets defined by the authorities of the government. The government promotes private sectors but does not direct them in any case. 

Financial planning

Financial planning is the form of planning that allocates the resources in terms of money, which means the organisation that will give more money as the revenue will get more resources. The allocation of resources is done in terms of money because it helps reduce the maladjustment between supply and demand. The balance between supply and demand is maintained by financial planning and helps in reducing the inflation that can affect the stability of economic planning. 

Fixed plans

The following type of economic planning is planned for a certain period that shows the target can be met during a certain period such as for five or six years. In this type of planning, there are some targets that the organisations have to meet during a certain time otherwise the organisations face difficulties in obtaining the resources for their manufacturing process. 

Centralised plans

The following type of economic planning is planned by the involvement of the central authorities that are responsible for defining certain rules regarding the planning. The authorities formulate the plan, set the objective of the plan, priorities, and targets. The authorities are doing so because the economy of the nation can be enhanced by the involvement of the central authorities. 

Define Indian economy

The economy of India comes under the developing economy      because the major portion of the work in India is based on the primary sector.  The major portion of the work in India is based on the primary sector. India’s economy is totally dependent on the primary sector, which is agriculture. Agriculture sector includes fishery, forestry etc that contributed the highest percentage of tax hence is good for the growth of the nation. Large number of the people are uneducated therefore, they need to do agriculture work for the Indian economy. 

What is the LPG model of development?

The LPG model of development consists of three measures that help develop the economy of the nation and the measures are

Liberalisation

Liberalisation promotes the end of the restriction that can be a hindrance in the development of the economy of the nation. The objective of this measure is to enhance the competition within the domestic industries, improve foreign technologies and capital, and reduce the debt of the country. In the liberalisation licence raj has been included the aim of this is to keep control on the private sector. All industries need a licence to grow their business and the licence is given by the government bodies.

Privatisation

The privatisation policy of the model defines the privatisation of the government-owned industries so that the economy of the country can be enhanced. The above policy of the model increases the impact of private companies over government-owned industries. 

Globalisation

The globalisation policy of the model aims to connect the economy of the country to the global economy so that the level of the economy can be enhanced. The above-stated policy of the model focuses on foreign trade and investments so that a borderless world can be created.

Conclusion

The study of the above section concludes that economic planning is for the development of the country. The LPG model of development is discussed in a section that helps in improving the economy of the nation by following three policies of the model. The economy of India is also elaborated which provides clear knowledge of the economy of India. LPG model stands on liberalisation, privatisation and globalisation. Liberalisation is good to bring foreign exchange and foreign investors. The advantage of liberalisation is to bring private industry to work with the public to increase the growth rate of the country. India privatisation is used to increase the employment of the nation and to maximise the profit. The goal of globalisation is to raise the economy by making the international market. LPG model is good for the growth and development of the country that leads a healthy wealth of the nation.