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ROLE OF CHAMBERS OF COMMERCE AND CONFEDERATION OF INDIAN INDUSTRIES
Chambers 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:
i. Businessmen get valuable information free of cost.
ii. They 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 interest.
(v) Differences and disputes among businessmen can be solved amicably and economically with the help of chambers of commerce.
(vi) Members take advantage of educational and training facilities offered by chambers of
(vii) Chambers 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)
(iv) Mawari Chamber of Commerce (Mumbai)
(v)Madras Chamber of Commerce (Chennai)
(vi) Punjab, 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 (CII)
(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 corporate members.
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.
Economic 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.
Need 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
Objectives of Economic Planning
Economic Growth. Balanced Regional Development. Reduction of Economic In Equalities. Reduction of Unemployment. Modernization.
Members Of Planning Commission Of India – Chairman -Dr. Manmohan Singh Member,Deputy Chairman - Shri Montek Singh Ahluwalia,(Prime Minister) Secretary - Shri Rajeev Ratna Shah
Five Year Plans
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.
• Many primary schools were started in rural areas. Panchayat elections were started.
• State electricity boards and state secondary education boards were formed. Fourth five
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 overpopulation.
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 Economy
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:
• To develop the rural & agricultural sector
• To generate employment opportunities and promote poverty reduction.
• To provide for the basic infrastructural facilities like education for all, safe drinking water, primary health care, transport, energy. Tenth five year plan (2002-07)
• Attain 8% GDP growth per year.
• Reduction 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.
9. Education 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.
10. Women 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 work.
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 financial units.
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.
Concept 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 traditional sense.
Planning 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 Devine.
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 demand.
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.
Planning in capitalism
Intra-firm 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 production planning.
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 entrepreneur's role.
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 enterprises.
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 planning.
State development planning
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 structural transformation."
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).
Economic 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 iterations.
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.
East Asian Tigers
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 mixed economies.
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 inefficient.
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 activity.
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