onomi lannin 4.7
of the open door policy in 1985 to save the (iii) side by side setting numerical/quantitative
economy. The Chinese open door policy was an targets (similar to the practice in the
initiative in the direction of ‘market socialism’ imperative planning) a set of economic
under the communist political design (a popular policies of indicative nature is also
student demand for political reform in favour of announced by the economies to realise
democracy was ruthlessly repressed in Tiananmen the plan targets.
Square in 1989). Similarly, the Soviet Union (iv) the indicative nature of economic policies,
under the leadership of Mikhail Gorbachev began which are announced in such planning,
a process of political and economic reforms, called
basically encourage or discourage the
prestroika (i.e., restructuring) and glasnost (i.e.,
private sector in its process of economic
openness) in 1985 to save the failed economic
decision making.
experiments in the state economy. Other East
European economies followed similar economic After converting to a mixed economy by
reforms from 1989 onwards. Thus, the whole the mid-1940s, France commenced its first six
world of the state economies had moved towards year plan in 1947, which got popularity as the
market economy by the late 1980s. Since then Monnet Plan (he was the first chairman of the
none of the countries have followed imperative General Planning Commission and the then
planning. Cabinet Minister for planning in France).16
Later, Monnet Plan became synonymous with
2. Indicative Planning indicative planning. This plan is also sometimes
In the following two decades after the soviet described as the basic sector planning as the
planning commenced, the idea of planning got government had selected eight basic industries
attention from the democratic world. A time as the core of development in which the nature
came when some such economies started national of planning was almost imperative, i.e., under
planning. As they were neither state economies state monopoly (these sectors were owned by the
nor communist/socialist political systems, the private sector till 1944 when France went for their
nature of their planning was different from the nationalisation).17 Other economic activities were
command economies. Such planning has been open for private participation for which indicative
termed as indicative planning by economists and kind of policy-planning was essential. France as
experts. The identifying features of indicative well as Japan have followed indicative planning
planning may be summed up as under: with great success. It was in 1965 that the UK
(i) every economy following the indicative commenced such a planning with the National
planning were mixed economies. Plan and abandoned in 1966 after being overtaken
(ii) unlike a centrally planned economy by events (a balance of payment crisis resulting in
(countries following imperative planning)
16. George Albert Steiner, Government’s Role in
indicative planning works through the Economic Life, McGraw-Hill, New York, 1953, p. 152.
market (price system) rather than replaces 17. India had a French influence on its development
it.15 planning when it followed almost state monopoly in
the six infrastructure industries also known as the core
15. Collins Internet-linked Dictionary of Economics, or the basic industries, i.e., cement, iron and steel, coal,
Glasgow, 2006. crude oil, oil refinery and electricity.