Components of Economic Planning

A complete or sound economic plan encompasses various aspects or components. These are discussed below:

1. Objectives: The first step in formulating any economic plan is to determine the main objectives. When creating a plan, economic and social objectives and their corresponding goals are established. To achieve the stated development plan's objectives, development priorities and goals are set within the plan. The primary objectives of any good plan include fulfilling basic needs, increasing investment, production, employment, and national income.
2. Goals: Setting goals in an economic plan means expressing the aforementioned objectives in quantitative terms. Goals are considered the outcomes of achieving objectives. Policies are needed to reach goals from objectives. The goals of an economic plan include achieving high economic growth, increasing per capita income, reducing poverty, controlling population, and making quantitative improvements in education, health, transportation, irrigation, etc.
3. Policy: Just as we need a clear path to reach a destination, policies are required to achieve the goals and objectives of economic development. To ensure the balanced development of different sectors of the state, appropriate policies should be formulated and implemented. Generally, economic plans formulate and implement policies related to economics, administration, development, trade, education, and health. Policy is considered a guideline for developing all these sectors.
4. Priorities: In any state, the needs of citizens and the tasks that the state must perform are unlimited. However, the available resources and means to fulfill all these needs are limited. Therefore, to meet unlimited needs with limited resources, the state must prioritize based on the level of needs. Good economic plans clearly define priorities.
5. Programs: A program is a specific subsidiary plan with detailed procedures prepared to achieve the objectives of an economic plan. Just as a house needs an excellent combination of various materials to be built, the success of any state's economic plan depends on the success of its economic, social, and administrative programs. For example, to achieve 100% literacy in Nepal, it is necessary to run programs in the government, non-government, and private sectors so that every citizen can achieve basic literacy.
6. Monitoring and Evaluation: To achieve the goals and objectives mentioned in the economic plan, it is not enough to create programs, manage finances, and establish administrative structures. Responsible levels must regularly monitor whether all these arrangements are being properly utilized at the plan implementation level. Additionally, it is extremely important to periodically evaluate the work done to assess whether the specified goals can be achieved within the set time frame with the available resources and means.
7. Financial Resources and Allocation: The success or failure of an economic plan depends on the efficiency of the human resources allocated and the adequacy of the available financial resources. In every economic plan, the state allocates budgets and programs based on sectoral priorities. For example, Nepal's economic plan prioritizes the basic needs of citizens when allocating resources and means. It also makes necessary financial arrangements for national pride projects aimed at providing significant support to the country's economic development.

Processes of Economic Plan Formulation

There is no uniform opinion among all economists regarding the formulation of economic plans. The plan formulation process also differs based on short-term, medium-term, and long-term plans. In Nepal, the National Planning Commission undertakes the task of central plan formulation.

There is also a provision for a Ministry of Finance and Planning in all seven provinces for planning work.

The National Planning Commission adopts the following stages when formulating economic plans in Nepal:

Stage 1: Evaluation of Previous Plans and Estimation of New Plans

When formulating a new plan, it is essential for the Planning Commission to evaluate how successful or unsuccessful previous plans were. While formulating a new plan, all the shortcomings of past plans should be reviewed and addressed to avoid repeating them. Good and effective programs should be continued. Additionally, the Planning Commission should also propose an estimated statement of income and expenditure for the new plan.

Stage 2: Collection and Presentation of New Plan Proposals

When formulating a new plan, the Planning Commission solicits proposals for future programs from government bodies at the central, provincial, and local levels. The Planning Commission itself also prepares and presents proposals for projects that it prioritizes nationally.

Stage 3: Discussion on New Plan

Discussion is the most important stage in the plan formulation process. The discussion, led by the commission, involves members of the National Planning Commission, members of the National Development Council, secretaries of ministries, experts in sectoral subjects, and representatives of donor agencies. This type of discussion helps the Planning Commission to prepare the outline of the new plan.

Stage 4: Determination of Objectives, Goals, Policies, and Priority Areas

When formulating any new economic plan, achievable economic and social objectives must be determined. The main objectives of a good plan include fulfilling basic needs, increasing investment, production, employment, and national income. 

In line with these objectives, goals such as achieving high economic growth, increasing per capita income, reducing poverty, controlling population, and making quantitative improvements in education, health, transportation, irrigation, etc., should be set. 

Policies are required to achieve the objectives and goals of economic development. Generally, economic plans formulate and implement policies related to economics, administration, development, trade, education, and health.

To achieve the aforementioned objectives and goals, development priorities must also be set within the plan. To meet unlimited needs with limited resources, the state must prioritize based on the level of needs. Good economic plans clearly define which sectors will be given development priority.

Stage 5: Plan Legitimacy and Implementation

The National Planning Commission presents the prepared document to the National Development Council for legitimacy. After the proposed plan is approved, it moves forward for implementation in coordination with the Government of Nepal, donor agencies, the private sector, and non-governmental organizations.