The Indian Development Planning Era:
Macroeconomic Theory & Practice
Extra Credit Research Paper
The Indian Development Planning Era:
An Analysis of the First & Second Five-Year Plans
SUBMITTED UNDER THE GUIDANCE OF
PROF PRABAL K. SEN
XLRI, JAMSHEDPUR
D. Krishna Bhaskar (B07080)
Vamsi K. Valluri (B07118)
BM-B
________________________________________
PGDBM 2007-09 XLRI, Jamshedpur
1. Introduction
A planned economy is an economic system with a central or overarching body that exercises control over the economy. The concept was a common feature of many Socialism-inspired economies including India and its most extensive form is referred to as a command or centrally planned economy. The model gained prominence mainly because of its adoption by the erstwhile Soviet Union and later on during the âGreat Leap Forward' by China. The anti-thesis of the capitalist-backed âlaissez-faire' model, it is currently practiced actively by very few nations, including Cuba, Myanmar & North Korea.
Ironically, though, as many economists point out, it's very much alive in the corporate world â" the heart of the capitalist system, as most global corporations are essentially miniature centrally planned economies. Some of the advantages of planned economic development are:
i) Stability
ii) Collective objectives can be met at the cost of smaller individual gains
iii) Adherence to a vision/design
The second and third points mentioned above were a major draw for the newly-independent and emerging nations to opt for this approach.
The following are some of the disadvantages associated with the model:
i) Inefficient resource distribution
ii) Lack of incentive for innovation, hard work, etc
iii) Infringes on individualism
The period beginning late 80s saw India, People's Republic...
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