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Meaning of Economic Planning
Every individual desires progress, advancement, and prosperity in their life. Similarly, families or organizations formed by individuals also want to organize and make productive use of available resources for their development and prosperity.
Likewise, the state also wants to spend the resources available to it in production, development, and service-oriented sectors to increase national income and achieve social prosperity. The government wants to ensure access to health, education, transportation, communication, irrigation, electricity, and drinking water facilities for all citizens.
Similarly, the government wants to increase the income of the people by developing mineral, agricultural, and water resources. Economic planning is necessary for this.
Economic planning refers to a document implemented by the government to achieve specific economic objectives within a specified time frame by progressively increasing the country's national income and achieving economic development goals.
According to economist H.D. Dickinson, "Economic planning is the making of major economic decisions – what and how much is to be produced, and to whom it is to be allocated – by the conscious decision
In short, planning is the formulation and implementation of economic programs by prioritizing and making proper use of available resources to achieve national objectives within a specified time frame.
Evolution of Economic Planning in Nepal
The history of planned development in Nepal is not very old. Regarding the development of economic planning, some efforts were made during the Rana regime. In 1949 BS, the National Planning Committee was formed to formulate a 15-year plan. Similarly, a 20-year plan was announced during the tenure of Rana Prime Minister Juddha Shumsher, but it could not be implemented.
The actual initiation and implementation of economic planning in Nepal began in 2013 BS. After the implementation of the First Five-Year Plan in 2013 BS, Nepal has completed 15 periodic plans, and the Sixteenth Plan has been underway since 2081 BS.
The development process of Nepal's periodic economic plans is presented in Table 8.1.
Table 8.1 Development Process of Nepal's Periodic Economic Plans
| S.N. | Plans | Plan Period |
|---|---|---|
| 1 | First Plan | 2013 BS to 2018 BS |
| 2 | Second Plan | 2019 BS to 2022 BS |
| 3 | Third Plan | 2022 BS to 2027 BS |
| 4 | Fourth Plan | 2027 BS to 2032 BS |
| 5 | Fifth Plan | 2032 BS to 2037 BS |
| 6 | Sixth Plan | 2037 BS to 2042 BS |
| 7 | Seventh Plan | 2042 BS to 2047 BS |
| 8 | Eighth Plan | 2049 BS to 2054 BS |
| 9 | Ninth Plan | 2054 BS to 2059 BS |
| 10 | Tenth Plan | 2059 BS to 2064 BS |
| 11 | Eleventh Plan | 2064 BS to 2067 BS |
| 12 | Twelfth Plan | 2067 BS to 2070 BS |
| 13 | Thirteenth Plan | 2070 BS to 2073 BS |
| 14 | Fourteenth Plan | 2073 BS to 2076 BS |
| 15 | Fifteenth Plan | 2076 BS to 2081 BS |
Planning in Federal Structure (Planning in Federal System)
After the promulgation of the Constitution of Nepal in 2072 BS, the federal system was implemented in Nepal. Following the implementation of the federal system, there is a provision for a central planning commission at the center, while the Ministry of Finance and Planning of the respective province oversees all planning-related work in the seven provinces.
The constitution has granted all rights related to provincial-level planning to the provincial governments. The central planning commission remains under the central government.
Although there is no direct legal relationship between the provincial and central commissions, mutual coordination can occur during the process of planning and implementation.
Importance of Economic Planning
Planned development is necessary for the economic, social, political, and technical development of any country. Planned development helps in the proper utilization of available resources.
As a result, economic and social development can be achieved by improving national income and various aspects of human development.
The importance of economic planning or planned development in developing countries like Nepal can be summarized in the following points:
- To Reduce Poverty (Reduce Poverty): The major challenge of underdeveloped countries is mass poverty. To gradually reduce this, the plan includes programs specifically focused on the poor, such as income-generating, skill-based, and inclusive programs. Arrangements are made in the plan to ensure that all poor people have access to food, shelter, clothing, education, health, and clean drinking water.
- To Reduce Unemployment (Reduce Unemployment): Although the problem of unemployment is global, it is a pressing issue in underdeveloped countries. Programs are included in periodic plans to create employment for the underemployed in the agricultural sector, educated unemployed, and industrial unemployed. Programs such as providing skill-based vocational training to the unemployed, providing loans at concessional interest rates without collateral, and providing loans on group guarantee can be implemented to reduce unemployment.
- Construction of Development Infrastructure (Construction of Infrastructure for Development): Development infrastructure is the foundation of economic development. Resources for the construction of development infrastructure such as roads, railways, and airports for transportation are mentioned in the plan. To improve the health sector, programs for the construction of primary health centers to hospitals must be included in the plan. Budget must be allocated in the plan for the establishment of schools, colleges, universities, and the construction of state-of-the-art infrastructure in the field of information and communication. Planning is also necessary to improve the agricultural sector through the use of modern tools and machinery, secure storage, and market assurance.
- To Promote Industrial Development (Industrial Development): Industrial development is another strong foundation of economic development. A large amount of money is required to establish domestic industries, small and medium-sized industries, and large-scale industries in the country. The state determines the necessary policies, programs, and investment amounts for the establishment and development of such industries. Economic planning is essential to produce and distribute consumer goods and services such as agricultural products, hydropower, cement, clothing, utensils, leather and cosmetic goods, furniture, and garments by maximizing the use of available capital, manpower, raw materials, and technology in the country.
- To Foster Economic Growth Rate (Foster Economic Growth Rate): Economic growth rate is used to determine the level of economic development of a country. A high economic growth rate indicates rapid economic development. To achieve a high economic growth rate, it is necessary to spend a large amount of money in a planned manner in productive sectors. The more the state invests in sectors that create employment, the higher the economic growth rate it can achieve. Economic planning is also necessary for this.
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