ROLE OF CHAMBERS OF COMMERCE AND
CONFEDERATION OF INDIAN INDUSTRIES
of commerce plays a vital role by rendering useful services to businessmen and
the Government. Services to businessmen Chambers of commerce serves as friends,
philosophers and guides to the business community. Businessmen derive the
following advantages from chambers of commerce:
get valuable information free of cost.
can expand their business activities with the help of suggestions and advice
from chambers of commerce.
(iii)Chambers of commerce creates markets
for the products of their members by organizing fairs and exhibitions.
(iv) Businessmen get a common forum at
which they can discuss problems and exchange views on matters of common
(v) Differences and disputes among
businessmen can be solved amicably and economically with the help of chambers
(vi) Members take advantage of
educational and training facilities offered by chambers of
of commerce undertakes research on behalf of their members.
(viii) Chambers of commerce fosters a sense
of cooperation's among businessmen.
Chambe rs of Comme rce in India
In India, chambers of commerce have
been organised at both regional and national levels.
1. Regional Chambers of Commerce
(i) Indian Chamber of Commerce (Kolkata)
(ii) Bengal Chamber of Commerce (Kolkata)
(iii)Indian Merchants Chamber (Mumbai)
Chamber of Commerce (Mumbai)
(v)Madras Chamber of Commerce (Chennai)
Haryana and Delhi Chamber of Commerce (New Delhi).
2. National Chambe rs of Comme rce
(i) Federation of Indian Chambers of
Commerce and Industry (FICCI)
(ii) Confederation of Indian Industry
(Hi) Associated Chambers of Commerce
and Industry (ASSOCHAM) (iv) All India Organizations of Employers (AIOE)
The Federation of Indian Chambers of
Commerce and Industry (FICCI) were estab lished in 1926 in New Delhi as an apex
central body of businessmen in India. It consists of both individual and
Its membership consists of 50
chambers of commerce and trade associations, 200 overseas members, and 1500
associate members. Its management is vested in an executive committee. FICCI
acts as a representative body of Indian business.
Planning in India
Economic Planning is to make,
decision with respect to Economic Planning is a, the use of resources. Term
used to describe the long term plans of government to co-ordinate and develop
Economic planning in India was started in 1950, the economy.
for Economic Planning
Mess Poverty And Low, Low Level of,
High Rate of Growth of Population, Per Capita Income Social And Economic
Problem Created By, Backward Technology, Literacy Partition Of Country
of Economic Planning
Economic Growth. Balanced Regional
Development. Reduction of Economic In Equalities. Reduction of Unemployment.
Members Of Planning Commission Of
India – Chairman -Dr. Manmohan Singh Member,Deputy Chairman - Shri Montek Singh
Ahluwalia,(Prime Minister) Secretary - Shri Rajeev Ratna Shah
The economy of India is based in part
on planning through its five year plans which are developed, executed and
monitored by planning commission .The tenth plan completed its terms in march
2007 and the eleventh plan is currently underway .1. First five year
plan(1951-1956)2. Second five year plan (1956-1961)3. Third five year plan
(1961-1966)4. Fourth five year plan (1969-1974)5. Fifth five year plan
(1974-1979)6. Sixth five year plan (1980-1985)7. Seventh five year
plan(1985-1990)8. Eighth five year plan(1992-1997)9. Ninth five year plan(1997-2002)10.
Tenth five year plan (2002-2007)11. Eleventh five year plan (2007-2012)
1. First five year plan(1951-1956)-
The first Indian Prime Minister, Jawaharlal Nehru presented the first five-
year plan to the Parliament of India on 8 December 1951.• The plan addressed,
mainly, the agrarian sector, including investments in dams and irrigation.• The
most important feature of this phase was active role of state in all economic
sectors. after independence, India was fac ing basic problems— deficiency of capital
and low capacity to save.• At the end of the plan period in 1956, five Indian
Institutes of Technology (IITs) were started as major technical institutions.
2. Second five year plan(1956-61) -
The second five- year plan focused on industry, especially heavy industry.•
Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and
Rourkela were established. Coal production was increased. More railway lines
were added in the north east.• Atomic energy was also formed in second five
year plan.• The total amount allocated under the second five year plan in India was Rs. 4,800 crore.
This amount was allocated among various
sectors:• Mining and industry•
Community and agriculture development• Power and irrigation• Social services•
Communications and transport
3. Third five year plan (1961-66)
-The third plan stressed on agriculture and improving production of wheat, it
is also shifted the focus towards the Defense industry.
primary schools were started in rural areas. Panchayat elections were started.
electricity boards and state secondary education boards were formed. Fourth
year plan (1969-74) - At this time
Indira Gandhi was the Prime Minister. The Indira Gandhi government nationalized
14 major Indian banks and the Green Revolution in India advanced agriculture.
4. Fifth five year plan (1974-79) -
Stress was laid on employment, poverty, alleviation, and justice. The plan also
focused on self-reliance in agricultural production and defense.• The Indian
national highway system was introduced for the first time. Sixth five year
plan(1980-85) - The sixth plan also marked the beginning of economic
liberalization. This led to an increase in food prices and an increase in the
cost of living.• Family planning was also expanded in order to prevent
5. Seventh five year plan(1985-90)
-The Seventh Plan marked the comeback of the Congress Party to power.• The main
objectives of the 7th five year plans were to establish growth in areas of
increasing economic productivity, production of food grains, and generating
employment opportunities.• The thrust areas of the 7th Five year plan have been
enlisted below:• Social Justice• Using modern technology• Agricultural
development• Full supply of food, clothing, and shelter• Increasing
productivity of small and large scale farmers• Making India an Independent
6. Eighth five year plan(1992-97)
-Between 1990 and 1992, there were only Annual Plans.• It was the beginning of
privatization and liberalization in India.• Modernization of industries was a
major highlight of the Eighth Plan.• India became a member of the World Trade
Organization on 1 January 1995.• The major objectives included, controlling
population growth, poverty reduc tion, employment generation, strengthening the
infrastructure, Institutional building, tourism management, Human Resource
development, Involvement of Panchayat raj, Nagar Palikas, N.G.OS and
Decentralization and peoples participation.
7. Ninth five year plan(1997-2002)
-The main objectives of the Ninth Five Year Plan of India are:
develop the rural & agricultural sector
generate employment opportunities and promote poverty reduction.
provide for the basic infrastructural facilities like education for all, safe
drinking water, primary health care, transport, energy. Tenth five year plan
8% GDP growth per year.
of poverty ratio by 5 percentage points by 2007. Providing gainful and
high-quality employment at least to the addition to the labor force Reduction
in gender gaps in literacy and wage
rates by at least 50%.
8. 11th Five Year Plan Target Income
& ,Poverty Accelerate growth rate of GDP from 8% to 10% and then maintain
at 10% in the 12th Plan in order to double per ,capita income by 2016-17. Reduce
educated, Increase agricultural GDP growth rate to 4% per year. Raise real wage
rate of unskilled workers by, unemployment to below 5%. 20 percent.
Reduce dropout rates of children from, Increase elementary school from 52.2% in
2003-04 to 20% by 2011-12. Lower gender, literacy rate for persons of age 7
years or more to 85%. gap in literacy to 10 percentage points.
and Children Ensure that at least 33 percent, of the direct and indirect
beneficiaries of all government schemes are ensure that all children enjoy a
safe, women and girl children.
childhood, without any compulsion to
11. Environment Increase forest and
tree cover by 5, Attain WHO standards of air quality in all major, percentage
points. Treat all urban waste water by 2011-12 to clean river, cities by
2011-12. Increase energy efficiency by 20 percentage points by 2016-17.,waters.
12. Conclusion Economic Planning
help in mobilizing Objective of economic, and allocating the resources in
desired manner. Planning is to reduce inequality, economic growth, balanced
regional Each five year plan aims at achieving certain, growth, modernization.
target. Five year plan constitute the steps toward the fulfillment of
objectives of economic planning.
Economic planning is a mechanism for
economic coordination contrasted with the market mechanism. There are various
types of planning procedures and ways of conducting economic planning. As a
coordinating mechanism for socialism and an alternative to the market, planning
is defined as a direct allocation of resources and is contrasted with the
indirect allocation of the market.
The level of centralization in
decision-making in planning depends on the specific type of planning mechanism
employed. As such, one can distinguish between centralized planning and
decentralized planning. An economy primarily based on central planning is
referred to as a planned economy. In a centrally planned economy the allocation
of resources is determined by a comprehensive plan of production which
specifies output requirements. Planning may also take the form of directive
planning or indicative planning.
Most modern economies are mixed
economies incorporating various degrees of markets and planning.
A distinction can be made between
physical planning (as in pure socialism) and financial planning (as practiced
by governments and private firms in capitalism). Physical planning involves
economic planning and coordination conducted in terms of disaggregated physical
units; whereas financial planning involves plans formulated in terms of
Different forms of economic planning
have been featured in various models of socialism. These range from
decentralized-planning systems, which are based on collective-decision making
and disaggregated information, to centralized systems of planning conducted by
technical experts who use aggregated information to formulate plans of
production. In a fully developed socialist economy, engineers and technical
specialists, overseen or appointed in a democratic manner, would coordinate the
economy in terms of physical units without any need or use for financial-based
calculation. The economy of the Soviet Union never reached this stage of
development, so planned its economy in financial terms throughout the duration
of its existence.
of socialist planning
The classical conception of
socialist economic planning held by Marxists involved an economic system where
goods and services were valued, demanded and produced directly for their use- value,
as opposed to being produced as a by-product of the pursuit of profit by
business enterprises. This idea of "production for use" is a
fundamental aspect of a socialist economy. This involves social control over
the allocation of the surplus product, and in its most extensive theoretical
form, calculation- in-kind in place of financial calculation. For Marxists in
particular, planning entails control of the surplus product (profit) by the
associated producers in a democratic manner.
This differs from planning within
the framework of capitalism, which is based on the planned accumulation of
capital in order to either stabilize the business cycle (when undertaken by
governments) or to maximize profits (when undertaken by firms), as opposed to
the socialist concept of planned production for use.
In such a socialist society based on
economic planning, the primary function of the state apparatus changes from one
of political rule over people (via the creation and enforcement of laws) into a
technical administration of production, distribution and organization; that is
the state would become a coordinating economic entity rather than a mechanism
of political and class-based control, thereby ceasing to be a state in the
ve rsus Command
The concept of a command economy is
differentiated from the concept of a planned economy (or economic planning),
especially by socialists and Marxists, who liken command economies (such as
that of the former Soviet Union) to that of a single capitalist firm, organized
in a top-down administrative fashion based on bureaucratic organiza tion akin
to that of a capitalist corporation.
Economic analysts have argued that
the economy of the former Soviet Union actually represented an administered or
command economy as opposed to a planned economy because planning did not play
an operational role in the allocation of resources among productive units in
the economy; in actuality, the main allocation mechanism was a system of
command-and-control. As a result, the phrase administrative command economy
gained currency as a more accurate descriptor of Soviet-type economies.
Decentralized economic planning is a
planning process that starts at the user- level in a bottom- up flow of
information. As such, decentralized planning often appears as a complement to
the idea of socialist self- management (most notably by libertarian socialists
and democratic socialists).
The theoretical postulates for
models of decentralized socialist planning stem from the thought of Karl
Kautsky, Rosa Luxembourg, Nikolai Bukharin and Oskar Lange. This model involves
economic decision- making based on self- governance from the bottom- up (by
employees and consumers) without any directing central authority. This often
contrasts with the doctrine of Leninists, Marxist-Leninists and Social
democrats, who advocate directive administrative planning where directives are
passed down from higher authorities (planning agencies) to agents (enterprise
managers), who in turn give orders to workers.
Two contemporary models of
decentralized planning are Participatory economics, developed by the economist
Michael Albert; and negotiated coordination, developed by the economist Pat
Material balance planning was the
type of economic planning employed by Soviet-type economies. This system
emerged in a haphazard manner during the collectivization drive under Joseph
Stalin, and emphasized rapid growth and industrialization over efficiency.
Eventually this method became an established part of the Soviet conception of
"socialism" in the post-war period, and other Socialist states
emulated it in the latter half of the 20th century. Material balancing involves
a planning agency (Gosplan in the case of the USSR) taking a survey of
available inputs and raw materials, using a balance-sheet to balance them with
output targets specified by industry, thereby achieving a balance of supply and
The economic models developed in the
1920s and 1930s by American economists Fred M. Taylor and Abba Lerner, and by
Polish economist Oskar Lange, involved a form of planning based on marginal
cost pricing. In Lange's model, a central planning board would set prices for
producer goods through a trial-and-error method, adjusting until the price
matched the marginal cost, with the aim of achieving Pareto-efficient outcomes.
Although these models were often described as "market socialism",
they actually represented a form of "market simulation" planning.
and intra-industry planning
Large corporations use planning to
allocate resources internally among its divisions and subsidiaries. Many modern
firms also utilize regression analysis to measure market demand in order to adjust
prices and to decide upon the optimal quantities of output to be supplied.
Planned obsolescence is often cited as a form of economic planning employed by
large firms to increase demand for future products by deliberately limiting the
operatio nal lifespan of its products.
The internal structures of
corporations have been described as centralized command economies that employ
both planning and hierarchical organization and management. According to J.
Bradford DeLong, a significant portion of transactions in Western economies do
not pass through anything resembling a market. Many transactions are actually
movements of value among different branches and divisions within corporations,
companies and agencies. Furthermore, a significant portion of economic activity
is planned in a centralized manner by managers within firms in the form of
production planning and marketing management where consumer demand is
estimated, targeted and included in the firm's overall plan; and in the form of
In The New Industrial State, the
American economist John Kenneth Galbraith posited that large firms manage both
their prices and consumer demand for their products through sophisticated
statistical methods. Galbraith also pointed out that, because of the increasingly
complex nature of technology and specialization of knowledge, management had
become increasingly specialized and bureaucratized. The internal structures of
corporations and companies had been transformed into what he called a
"techno structure", where specialized groups and committees are the
primary decision- makers, and specialized managers, directors and financial
advisers operate under formal bureaucratic procedures, replacing the individual
Joseph Schumpeter, an economist
associated with the Austrian school and Institutional school of economics,
argued that the changing nature of economic activity – specifically the
increasing bureaucratization and specialization required in production and
management – was the major reason for why capitalism would eventually evolve
into socialism. The role of the businessman was increasingly bureaucratic, and
specific functions within the firm required increasingly specialized knowledge
which could just as easily be supplied by state functionaries in publicly owned
In the first volume of Capital, Karl
Marx identified the process of capital accumulation as central to the law of
motion of capitalism. Increased industrial capacity from increasing returns to
scale further socializes production. Capitalism eventually socializes labor and
production to a point where the traditional notions of private ownership and
commodity production become increasingly insufficient for further expanding the
productive capacities of society, necessitating
the emergence of a socialist economy where the means of production are socially
owned and the surplus value is controlled by the workforce.
Many socialists viewed these
tendencies, specifically the increasing trend toward economic planning in capitalist
firms, as evidence of the increasing obsolescence of capitalism and
inapplicability of ideals like perfect competition to the economy; with the
next stage of evolution being the application of society-wide economic
State development planning or
national planning refers to macroeconomic policies and financial planning
conducted by governments to stabilize the market or promote economic growth in
market-based economies. This involves the use of monetary policy, industrial
policy and fiscal policy to "steer" the market toward targeted
outcomes. Industrial policy includes government taking measures "aimed at
improving the competitiveness and capabilities of domestic firms and promoting
In contrast to socialist planning,
state development planning does not replace the market mechanism and does not
eliminate the use of money in production. It only applies to privately owned
and publicly owned firms in the strategic sectors of the economy and seeks to
coordinate their activities through indirect means and market-based incentives
(such as tax breaks or subsidies).
planning in practice
Main articles: Analysis of
Soviet-type economic planning and Economy of the Soviet Union
The Soviet model of economic
planning is an economic system where decisions regarding production and
investment are embodied in a plan formulated by Gosplan (State planning agency)
through the process of material balances. Economic information, including
consumer demand and enterprise resource requirements, are aggregated and used
to balance supply (from available resource inventories) with demand (based on
requirements for individual economic units and enterprises) through a system of
The Soviet economy operated in a
centralized and hierarchical manner where directives were issued to lower-
level organizations. As a result, the Soviet economic model was often referred
to as a command economy or an administered economy because plan directives were
enforced through inducements in a vertical power-structure, where planning
played little functional role in the allocation of resources.
The United States utilized economic
planning during the First World War. The Federal Government supplemented the
price system with centralized resource allocation and created a number of new
agencies to direct important economic sectors; notably the Food Administration,
Fuel Administration, Railroad Administration and War Industries Board. During
the Second World War, the economy experienced staggering growth under a similar
system of planning. In the postwar period, US governments utilized such
measures as the Economic Stabilization Program to directly intervene in the
economy to control prices, wages, etc. in different economic sectors.
From the start of the Cold War and
up until the present day, the United States Federal Government directs a
significant amount of investment and funding into research and development
(R&D), often initially through the Department of Defense. The government
performs 50% of all R&D in the United States, with a dynamic state-directed
public-sector developing most of the technology that later becomes the basis of
the private sector economy. As a result, Noam Chomsky has referred to the
United States economic model as a form of State Capitalism. Examples include
laser technology, the internet, nanotechnology, telecommunications and
computers, with most basic research and downstream commercialization financed
by the public sector. This includes research in other fields including
healthcare and energy, with 75% of most innovative drugs financed through the
National Institutes of Health.
The development models of the East
Asian Tiger economies involved varying degrees of economic planning and
state-directed investment in a model sometimes described as "state
development capitalism" or the "East Asian Model".
The governments of Malaysia and
South Korea instituted a series of macroeconomic plans (First Malaysia Plan and
Five-Year Plans of South Korea) to rapidly develop and industrialize their
The economy of Singapore was
partially based on economic planning involving an active government industrial
policy and high levels of state-owned industry in a free- market economy.
Under dirigisme, France utilized
indicative planning and established a number of state-owned enterprises in
strategic sectors of the economy. The concept behind indicative planning is the
early identification of oversupply, bottlenecks and shortages so that state
investment behavior can be modified in a timely fashion to reduce the incidence
of market disequilibrium, with the goal of sustaining stable economic
development and growth. Under this system France experienced its "Trente
Glorieuses" period of economic prosperity.
The most notable critique of
economic planning came from Austrian economists Friedrich Hayek and Ludwig von
Mises. Hayek argued that central planners could not possibly accrue the
necessary information to formulate an effective plan for production because
they are not exposed to the rapid changes in the particular time and place that
take place in an economy, and are unfamiliar with these circumstances. The
process of transmitting all the necessary information to planners is therefore
Proponents of de-centralized
economic planning have also criticized central economic planning. For example,
Leon Trotsky believed that central planners, regardless of their intellectual
capacity, operated without the input and participation of the millions of
people who participate in the economy, and would therefore be unable to respond
to local conditions quickly enough to effectively coordinate all economic