Long-term plans last for the period of 10 to 30 years. They are also known as 'perspective plans'. The basic philosophy behind long-term planning is to bring structural changes in the economy. Give any three major objectives of development planning.
(i) To rise the national income.
(ii) To increase investment.
(iii) To expand employment opportunities.

Financial planning is nothing but techniques of planning in which resources are allocated in terms of money

(i) Natural Resource
(ii) Capital formation
(iii) Size of the market

(i) National Institution for Transforming India was formed on January 1, 2015 through a Union Cabinet resolution replacing the Planning Commission.
(ii) Prime Minister is the Chairperson and Union Ministers Ex-officio members.
(iii) Vice-Chairman of NITI Aayog is the functional head.

Economic Planning in the widest sense is the deliberate direction by persons-in charge of large resources of economic activity towards chosen ends. - Dalton

Gross National Product is the total total market value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (abroad) minus income of non residents located in that country.

Economic Growth	Economic Development
Deals with the problems of develop ed countries	Deals with the problems of UDCs (Under Developed Countries)
Change is gradual and stead	Change is discontinuous and s spontaneous
Means more output	Means not only more output but also its composition.
Concerns Quantitative aspects i.e. increase in per capita income	Quantitative as well as Qualitative
Narrow Concept	Wider Concept Development = Growth + Change.

Development must, therefore, be conceived as a multidimensional process involving major changes in social structures, popular attitudes and national institutions and acceleration of growth, the reduction of inequality and the eradication of absolute poverty.
Michael P. Todaro

Functional Planning:
(i) It refers to that planning which seeks to remove economic difficulties by directing all the planning activities within the existing economic and social structure.
Structural Planning:
(i) It refers to a good deal of changes in the socioeconomic framework of the country.
(ii) Under developed countries follow this type of planning.

To accelerate and strengthen market mechanism:
1. The market mechanism works imperfectly because of ignorance and unfamiliarity with it.
2. There is non monetized sector, unorganized factor, product, money and capital markets.
3. Therefore a planned economy is a better substitute for free economy.
To remove unemployment:
1. Capital is scarce, labour abundant so there is unemployment and disguised unemployment in UDCs.
2. So planning is needed.
To achieve bàlanced development:
1. For rapid economic development UDC needs planning to develop agriculture, industrial, establish socio and economic overheads and expand domestic and foreign trade.
Development of agriculture and industries:
1. Reorganization of agriculture releases surplus labour force which is absorbed by the industrial sector.
2. Development of agriculture is essential to supply raw materials for industries.
Development of infrastructure:
1. Canals, roads, railways, power stations are needed for agriculture and industries.
2. These economic and social overheads need huge capital investment and have long gestation period and low rate of return.
3. Only the state can provide this through planning.
Development of money and capital market:
1. Planning alone can provide sound money market and capital market.
To remove poverty and inequalities:
1. Planning raises national and per capita income, reduces inequalities and poverty and increases employment opportunities.

Human Resources:
(i) Human power increases productivity and thus national income.
(ii) A healthy, educated and skilled labour force is the most important productive asset.
Technical Know-how:
(i) As the scientific and technological knowledge advances, more sophisticated techniques steadily raise the productivity in all sectors.
Political Freedom:
(i) Development is linked with political freedom.
(ii) Dadabhai Naoroji said the drain of wealth from India under British rule is the major cause of increase in poverty in India.
Social Organization:
(i) Mass participation in development programs is a pre condition for accelerating development
(ii) When some groups enjoy the benefits of growth and majority of the poor do not participate in the process of development it is called crony capitalism.
Corruption free administration:
(i) Tax evasion breeds corruption and prevents progress.
Desire for development:
(i) If the level of consciousness is low and the people have accepted poverty as their fate, there is little scope for development.
Moral, ethical and social values:
(i) If people are dishonest, market cannot function.
Casino Capitalism:
(i) If people spend larger propotion of their income on entertainment liquor, illegal activities, production suffers. This is called casino capitalism.
Patrimonial Capitalism:
(i) If assets are inherited by children, they would not work hard because they do not know the value of the assets. So, production is low.

7 pillars of effective governance:
NITI AAYOG

Pro-People	Fulfills aspirations of society as well as individuals
Pro-Activity	in anticipation response to citizen needs
Participation	involvement of citizenry
Empowering	Women in all aspects
Inclusion of all	SC, ST, OBC, minorities, gareeb, gaon, kisaan
Equality	of opportunity for the youth
Transparency	making government visible and responsive.

Introduction:
(i) Planning may retard private initiatives, hamper freedom of choice, involve huge cost of administration and stop automatic adjustment of price mechanism.
(i) Loss of freedom
1. Regulations and restrictions are the backbone of a planned economy.
2. Economic freedom consists of freedom of consumption, freedom of choice of occupation, freedom to produce and the freedom to fix prices for the products.
3. Under planning, crucial decisions are made by the Central Planning Authority.
4. The consumers, producers and the workers enjoy no freedom of choice.
5. Hayek in his book 'Road to Serfdom' explains that centralized planning leads to loss of personal freedom and ends in economic stagnation.
(ii) Elimination of Initiative
1. Planning follows routine proocedure and may cause stagnation in growth.
2. Absence of private ownership and profit discourages entrepreneurs from risk taking.
3. Attractive profit is the incentive for searching new ideas, new methods.
4. All enjoy equal reward under planned economy irrespective of their effort, efficiency.
5. So, nobody is interested in undertaking new and risky ventures.
6. The bureaucracy and red tapism cause procedural delay and time loss.
7. So, even socialist countries like Russia and China offer incentives to private firms.
(iii) High cost of Management
1. Plan formulation and implementation involve an army of staff for data collection and administration.
2. Lewis remarks, "The better we try to plan, the more planners we need".
3. Inadequate data, faulty estimations and improper implementation of plans result in wastage of resources and cause either surplus or shortages.
(iv) Difficulty in advance
calculations
1. Advance calculations in a precise manner is impossible with regard to consumption and production.
2. It is also difficult to put the calculations into practice under planning.
Conclusion
1. The arguments against planning are mostly concerned with centralized and totalitarian planning.

1. Short-term (controlling plans or annual plans) for a period of one year (operation).
2. Medium term plans last 3-7 years but normally 5 years. Related to allocation of financial and physical resources (tactical planning).
3. Long-term (perspective or strategic plans) for 10 to 30 years: To bring structural changes in the economy.
4. Financial planning refers to the technique of planning in which resources are allocated in terms of money
5. Physical planning refers to allocation of resources in terms of men, materials and machinery.
6. Comprehensive plan concerns with the major issues for the whole economy.
7. Partial plan considers only the few important sectors of the economy.
Democratic planning:
1. Planning within democracy.
2. People are associated at every step in the formulation and implementation of the plan.
3. The plan prepared by the Planning Commission can be accepted, rejected or modified by the Parliament.
Totalitarian planning:
1. There is central control and direction of all economic activities.
2. Consumption, production, exchange, and distribution are all controlled by the state.
3. The planning authority decides the target, schemes, allocations, methods and procedures of implementation of the plan.
Centralized planning:
1. The entire planning in under a central planning authority.
2. This authority formulates a central plan, fixes objectives, targets and priorities for every sector.
3. It is planning from̀ above.
Decentralized planning
1. Local organizations and institutions formulate, adopt, execute and supervise the plan.
2. It is called planning from below.
Planning by Direction:
1. There is a central authority which plans, directs and orders the execution of the plan in accordance with pre-determined targets and priorities.
Planning by inducement
1. People are induced to act in a certain way through various monetary and fiscal measures.
2. If the planning authority wishes to encourage the production of a commodity, it can give subsidy to the firms.
Indicative planning:
1. It has been in practice in France since the Monnet Plan of 1947 and in mixed economies.
2. The outline of plan is prepared by the Government.
3. It is discussed with the representatives of private management, trade unions, consumer groups, and experts.
4. The essential function of planning is co-ordination of different economic units.
5. The state provides all facilities to the private sector.
6. The private sector fulfill the targets and priorities.
7. The state does not force the private sector but just indicates the areas of operation and targets to be fulfilled.
Imperative planning (China and Russia):
1. The state is all powerful in preparation and implementation of the plan.
2. The implementation is a matter of enforcement. Policies arc rigid.
3. There is complete control over the entire resources by the state. There is no consumer sovereignty.