Social Scientist. v 15, no. 170 (July 1987) p. 3.

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Planning and the Institutional Transformation of the Indian Economy


PLANNING AS an attempt to direct an economy to achieve some specified objectives has two major components. Th6 first counts of the efforts to determine the level of investment and its allocation into the different 'sectors of the economy, setting of targets of output for the sectors, ensuring intet-sectoral balances, including balance between the dom6stid and external sectors in the case of an open economy, the determination of corresponding prices, etc. Quite rightly these are the issues that attract most attention in planning models, and to some extent in planning processes as well when they deal with a short period of one year, or even of the standard five year planning period. But when planning is considered as a process over time, more than these issues have to be taken into account. This is particularly so when planning is thought of a$ a means to bring about what is generally recognised as "development^. Economic development, as a writer commenting on the role of plan models for development puts it, "takes place within a social framework ^f political1 and historical conditions and a regime of institutions'^.1 Anothe't jpr^dti-tioner of planning elaborates it thus :''Planning is not merely an exercise in economics, but also in sociology and politics. Any plan worth its name has to be a socio-political document. A plan is not merely an allocation of resources; it must recommend appropriate policie^ ^Irich^need t^W pursued awl institutions which must be built up so that the planned investi ment prograi&me yields expected results."2 In fact, whether m the short-run or iWthe long-run, planning always' takes place within aft institution miUeu.^ Ill tbej short-run it may be possible to ignore* this aspect or as$nme it to be one of the invariant "givens", and thus to concentrate on. wliat may be called ^tho oknmodity flow component" pf planing. In the long-run, however, this i&mot possible because the institutional milieu ^de^go^s change over time which may have considerable beiaringon th^ptoniOTg process. Or, asAe Indian Second F^ ^w f^ document explicit

"'Madras Institute of Development Studies. Madras,

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