Economic Planning

In a decentralized economy, economic planning is to be undertaken for the welfare of the local people.

Economic planning will utilize all the mundane and supramundane potentialities of the local area to meet the local requirements.

Factors of Planning

Economic planning should include the following factors:

1. Cost of production

In many rural economies, it is a traditional practice for farmers and their family members to work in the fields to grow crops.

At the time of fixing the price of their produce, they do not calculate:

• the labour costs in cultivating the land or wages for their family members.
• the cost of the tools or machines they use in the fields
• the other expenses incurred in producing their crops.

Hence, they fail to calculate the per unit cost of production.

As a result, they incur losses or perpetually get low prices for their produce.

To solve this problem, agriculture must be reorganized and established on the same basis as industry through the cooperative system.

According to PROUT, agriculture should be treated as an organized industry.

Only then can the per unit cost of production be systematically determined and the poverty of farmers end. Farmers will get proper prices for their commodities and stability in the agricultural sector will be achieved.

In a Proutistic economy, the cost of production should be systematically determined and kept at the minimum level.

All industries, including agrico-industries and agro-industries, must see that the cost of producing a particular commodity does not exceed its market value.

Every production unit must be economically viable.

2. Productivity

The economy should be organized so that it can innately produce more and more.

Money should be invested and kept rolling rather than hoarded so that the collective wealth of society is continually increased.

This principle guides planners so that maximum production will occur according to the collective needs.

There should be increasing production based on consumption and full employment for all local people. Products should be developed wherever raw materials are available, and under utilization of any production unit should not be allowed.

If people are guided by the needs and potentialities of their socio-economic unit, the law of productivity is benign.

Maximum production in the economy will provide a congenial environment for more investment, more industrialization, more employment, increasing purchasing capacity and increasing collective wealth in an ever progressive manner.

3. Purchasing capacity

Planning should also result in the increasing purchasing capacity of every person.

PROUT does not support the existing practice of considering the per capita income as the index of people’s economic standard.

Per capita income is a deceptive and defective measure of collective wealth popularized by capitalist economists to fool people and cover their exploitation.

The genuine measure of people’s economic advancement is increasing purchasing capacity.

To increase people’s purchasing capacity, the easy availability of the minimum requirements, stable prices, progressive, periodic increases in wages and salaries, and increasing collective wealth must be ensured.

In a Proutistic economy, there will be no limit to purchasing capacity – it will be ever increasing.

The minimum requirements must be guaranteed and should always be increased according to time, space and person.

This is best done by continuously increasing the purchasing capacity of the people in relation to the economic development of the concerned socio-economic unit.

The greater the purchasing power of the people, the higher their standard of living.

4. Collective necessity

Planners will also have to consider the existing collective needs as well as the future requirements of a socio-economic unit, and chalk out their developmental programmes accordingly.

In India, many industries have been established but the production of electricity has not been increased. Through lack of proper planning, power production has lagged behind industrial development. This is especially evident in Bengal and Bihar.

Most importance should be given to the production of the minimum requirements, so planners will have to make provision for the minimum requirements of all, but the requirements of both meritorious people and those with special needs should not be neglected, otherwise the requirements of the age will not be met.