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Question

Difficulty: MediumMeaning, Types, and Features of Economic Planning

In a mixed economy where the state formulates national development goals and guides private enterprise using market incentives and indirect policy instruments rather than issuing mandatory production directives, which type of economic planning is being implemented?

  1. Indicative planningAnswer
  2. B
    Imperative planning
  3. C
    Rolling planning
  4. D
    Perspective planning

Answer

Indicative planning
Indicative planning is designed for economies with strong private sector participation. The central planning authority sets broad economic objectives and uses policy tools (such as tax relief, subsidies, and credit control) to guide private businesses toward fulfilling national priorities voluntarily.

Step-by-Step Solution

1
Analyze the operational mechanism described in the question stem
The government sets macro targets and uses indirect market incentives to coordinate private sector activities.
Economic planning types are classified by how targets are enforced and how state authority interacts with private market actors.
2
Distinguish between directive-based and guidance-based planning types
Planning through guidance and incentives is indicative planning, whereas planning through binding state commands is imperative planning.
Indicative planning respects market mechanisms while offering policy direction to align private goals with national objectives.

Key Concept

Indicative Planning Features
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Topics

Meaning, Types, and Features of Economic Planning