Kinds of Planning
Following are the various kinds of Planning:
1. General Planning and Partial Planning:
Under General Planning a central body prepares a comprehensive plan for the whole economy and monitors its implementation. The Partial Planning relates to a particular sector or sectors of economy.
2. Functional and Structural Planning:
Functional Planning implies formulation of a plan without effecting any change in the political and economic structure or social values. In Structural Planning radical changes are made in the social system.
- 3. Centralized and Decentralised Planning:
In Centralized Planning the plan is formulated and implemented under the direction of a Central Authority. All concerned personnel and departments have to carry out the directives of the Central Authority. In Decentralized Planning plans are formulated at a lower level. All departments and institutions prepare their own separate plans, which are then integrated into a comprehensive plan.
4. Authoritarian and Democratic Planning:
Authoritarian Planning is the special feature of Communist countries. In exercise of its authority and powers the government prepares a comprehensive plan for all sectors of the economy and ensures its execution. Public opinion takes no part in this planning. The Democratic planning is adopted in democratic countries. Public opinion and especially the elected representatives of the people are taken into confidence while preparing the plan and at the various stages of its execution. Separate plans are formulated for the public and private sectors of the economy.
5. Induced and Forced Planning:
In induced planning the government attracts the private sector by various inducements and concessions to invest in different economic projects. These inducements include remission or reduction of tariffs, construction of infrastructure, import-export concessions etc. In the case of forced planning the task of formulation of a plan and its implementation is completely in the hands of the government. All matters are dealt with in accordance with the directives and orders of a Central Authority. All Communist countries follow the rule of forced planning while mixed economies generally depend on induced planning.
6. The Mode of Planning in Islam:
Planning by inducement is more in keeping with the basic principles of Islamic Economy because it recognizes the right of the individual to own and dispose of private property. Furthermore the freedom of thought and action in Islam requires that the people should decide their economic affairs freely untramelled by government pressure. However, if the private sector is lax or commits excesses and thus fails to fulfil the general purposes of the state and the economy, the Islamic State is authorised to nationalise any sector of production as required and take steps under a proper plan to achieve the desired objectives. In other words the standard mode of Planning in an Islamic Economy would be that in which there is perfect cooperation and harmony between the Public and the Private sector and both sectors coordinate their efforts to achieve the general objectives of the state and the economy.
There is no doubt that generally the mode of planning by inducement shall be followed in the private sector, but the mode in the public sector will be planning by direction. Necessary decisions regarding the.targets, priorities and policies in the public sector shall be taken at governmental level and implemented by the administrative machinery of the state. However, these decisions will be reached through a democratic and consultative process for the reigns of government in an Islamic State are in the hands of accredited representatives of the people.
7. Importance of Planning:
Planning has much importance in every sphere of life. Following are the steps or measures which are necessary for the uplift of planning:
(i) Stoppage of Wastage of Resources: Islam strongly disapproves of wastage of resources. It does not regard wastage as merely a crime against nation and humanity but also depreciation and ingratitude for the bounties of Allah, which is an offence accountable to Allah. Wastage can appear in many forms. For instance, unused productive resources, draining of resources in useless and luxurious spending or excessive concentration of resources in a single occupation etc. Planning is the most effective means of stopping the wastage or resources. Islam advocates a free economy. In this system competition among the producers might result in the wastage of resources. Planning can be most effective in preventing such wastage.
(ii) Elimination of Concentration of Wealth: Islam abhors the concentration of wealth. Planning can help in establishing an improved system of the distribution of wealth. Monetary and fiscal measures may be taken to direct the flow of wealth to all members and classes of the society. Monopolies can be eliminated by planning and thus the evil of concentration of wealth will forever be banished from the economy.
(iii) Achievement of Balanced Development: Balanced progress of all regions and departments is essential for economic stability. This purpose can be achieved by holding out inducements of various kinds through planning. In a free economy the possibility of unbalanced development is ever-present. It causes bitter regional conflicts. However, the Islamic objective of fostering brotherhood, equality and cooperation among individuals and regions can be easily achieved through planning.
(iv) Rapid Development: In the process of planning the targets of development are determined in advance and then all possible material and human resources are utilised to achieve those targets. This accelerates the rate of progress. The prevention of resources
wastage also increases the growth rate. The target of economic activities in the Islamic development model is rapid rate of progress, which can be fulfilled through planning.
(v) Capital Formation: Capital formation is the foundation of economic progress. It is possible only when the members of the
society desist from reckless spending on consumer goods. Generally Islam forbids stinginess and induces people to spend money, but by prohibiting extravagance and the adoption of a luxurious way of life it has indirectly opened the way for the growth of savings. By regulating spending on consumer goods through proper planning the rate of savings can be increased and thus capital can be provided for the completion of Development Projects. Besides the voluntary savings the state can bring about capital formation throughaforced savings as and when required.
(vi) Solution of the Problems of Population: Islamic ideology is inclined towards increasing rather than retarding the growth of population. The Holy Quran declares large population as Allah’s Grace and Bounty. The Apostle of Allah (S.A.W) also urged his followers to marry procreative women. He (S.A.W) wished Allah would vouchsafe him the pride of having a larger Ummah than the other Ummahs. In this perspective it becomes all the more important to adopt a mode of economic planning which would adequately solve the problems arising out of population growth.
In this connection instead of curbing the population it would be necessary to plan the use of manpower to prevent the wastage of human resources and utilise them to the maximum in the work of national advancement.
(vii) Protection of Labour Rights: Islam desires protection of the rights of all those who are engaged in economic activity, but in the case of labour especially it urges that they should be treated with justice and benevolence. It envisages such terms and conditions of the work for them as would increase their dignity as human beings and guarantee the provision of necessaries of life to them. To this end they cannot be left to the mercy of the employers. Adequate planning must be undertaken to fix wages and working hours of the labourers and to provide them social security, education and healthcare.
(viii) Provision of Employment: Provision of employment to all persons is an issue of vital importance in the Economic System of
Islam. In general economies unemployment is considered an economic ill, but in Islamic Economy it is regarded as a human disgrace and in certain cases as detrimental to faith in Allah. The problems of unemployment can be tackled by harnessing the national resources under a plan. An enlightened leadership by keeping in view the conditions of boom and depression can formulate such balanced policies which will eliminate the evil of unemployment from the economy and achieve a full employment level.
(ix) Educational Pro2ress: Education holds a central and pivotal importance in the Islamic System of life. It has been declared obligatory upon every Muslim, man or woman, to receive education from the cradle to the grave, even if he or she has to undertake painful journeys to distant lands. Getting an understanding and insight into Allah’s Book and obtaining knowledge of the teachings of His Prophet (S.A.W) is an essential duty of every Muslim but more than that every Muslim is exhorted to reflect on the creation of earth and heaven and constantly endeavor to unravel the mysteries of the universe. This will promote the process of research and pave the way of technical advancement. The educational sector may be expanded by planning. From a materialistic point of view this sector is generally not very profitable. Hence the chances of private resources flowing into it are very slight. However, great social purposes may be achieved by diverting resources to the educational sector through planning.
From the viewpoint of Islam character-building is an ‘integral part of the educational process. So educational progress will create in individuals the ability to conquer the universe as well as high moral qualities. As a result all members of the society will benefit from the fruits of the development efforts in the best manner.
(x) Development in the Health and Social Welfare Sectors: Physical health holds great importance in the Islamic way of life. Physical strength in a believer has been rated above physical infirmity. It is the healthy believers who can better perform the functions of the vicegerent of Allah. All practices including devotions and affairs, which Islam recommends, are conducive to raising the standard of health. Purity and neatness have been declared half of faith. All activities, which are injurious to health, have been strictly forbidden. Walking, recreation, exercise have been encouraged. The Holy Prophet (S.A.W) himself took interest in games which improve physical health. Like the educational sector, this sector also does not offer much incentive of profit to the investor. So resources for the development of this sector will have to be obtained through planning. Similarly, housing facilities, protection from pollution, water supply and drainage facilities can best be provided by planning.
(xi) Preaching and Propagation: To carry out preaching and propagation of Islam is the responsibility of an Islamic Society and particularly the Islamic State. For this purpose the work of setting the targets and securing means for achieving them can best be performed through planning. This task is so important that it cannot be left to the discretion of individuals. It can only be effectively done by collective efforts.
(xii) Defence and Jihad: Jihad is a permanent feature of the Islamic way of life. It is the duty of an Islamic State to provide security of life, property and honour to the people of Islam, to depend the frontiers of the State, to make effective arrangements to safeguard the sanctity of religious practices and to make all possible efforts to secure the supremacy of religion. To this end the Islamic State requires suitable material and human resources which can be obtained from internal and external sources through effective planning.
(xiii) Preservation of Cultural Values: The target of economic progress is generally the achievement of prosperity and satisfaction of material needs. But this economic progress is achieved at the cost of moral values of the society. Cultural relations are badly affected. Large-scale shifting population takes place. A flood of migration from rural areas to the cities brings in its wake numerous social problems. Longstanding conventional relationships disintegrate and high moral values totter under the weight of these problems. Planning can help in keeping the process of development under safe limits so that the social values are not adversely affected. Development efforts may be made to conform to moral values. Planning can also overcome the harmful consequences of the shifting of population.
(ix) Goals of Planning:
Setting the goals of planning depends on particular circumstances and with the change of circumstances the goals are also varied. However, under the Economic System of Islam of • general goals of planning will be as follows:
- Economic prosperity of the masses and economic uplift of the deprived class.
- To improve the standard of life of the people which includes besides material well-being, moral elevation also.
- Production of useful commodities.
- Balanced progress of all sectors and regions.
- Reduction of dependence on foreign aid.
- Progress and dissemination of Science and Arts.
Besides these general goals, specific targets may also be set according to the prevailing circumstances. These targets include an end to unemployment, control over inflation, development of industry % agriculture and means of communication, provision of facilities of education, healthcare, social welfare and social security etc. It is absolutely essential that these goals should be achieved according to the means prescribed in the Holy Quran and the Sunnah.
(x) Selection of Goals:
In the selection of goals it is important to keep in mind the principle that only those goals should be given priority -which promise the greatest economic well-being of the greatest number. The aim of Islamic Economics is not only to achieve rapid economic development but also to establish economic and social justice and attain balanced progress of all sectors and regions.
Sometimes a conflicting situation arises between the set goals of economic planning. To remove this conflict a principle has been laid down that only those goals should be given priority, which promise the greatest goods to the greatest number of people. In other words more useful goals should be preferred to the less useful. In case the choice has to be made between two evils, the lesser evil should be chosen. For example, a region needs a sports ground as well as a school or a technical training institute, but paucity of resources prevents the fulfilment of both needs. In this case in view of the importance of education and training the project of building a sports ground will be deferred and resources would be allocated to , building a school or training institute. Similarly, choice has to be made between installation of two industrial projects in a region. In this case the industrial project which will spread less pollution shall be installed.
In economic planning physical targets are set for various sectors i.e., rate of growth in national income, creation of employment opportunities, production levels in various industries, production levels in agricultural crops, provision of facilities of education and healthcare. These targets are set keepilg in view the available resources, the capacity to avail of these resources and the needs of the country.
Generally more than one method is employed to achieve the goals of a plan. At this state the planners have to consider as to which method is the best to achieve the goals with available resources. This exercise is called the strategy of the plan. ‘
Economic planning overlaps several circles. So a separate strategy has to be evolved for each circle i.e., strategy for the growth-rate of the economy, strategy for investment, strategy for savings, strategy for the removal of gaps in regional development and in incomes, strategy for manpower, strategy for employment etc. etc.
The priorities are determined under the strategy of the plan. The best guide in determining priorities is what the country needs. It is the government authorities who decide the needs of the country and the task of the ecOnomic planners is implement those decisions.
In an Islamic setting the total or sector-wise strategy or priority of the plan shall be determined in view of the collective aims which form the basis of Islamic way of life. The topmost of these aims are economic betterment of the majority of people and improvement of the standard of morality and character. There are no set rules for determining strategy and priorities. They are formulated according to the demands of the circumstances and the availability of resources.
(xiv) Procurement of Finances:
In an Islamic State there are two sources for the procurement of finances for the fulfilment of an economic plan:
- Internal Resources.
- B. External Resources.
- A. Internal Resources:
(i) Private Savings: In an Islamic Economy there is no scope for expenditure on a luxurious way of life, materials for sensuous and sinful enjoyment and lavish display, so there is a vast potential for private savings which by a wise strategy can be used for the purposes of economic development. The people in general are full of good feelings and have a strong desire for doing well to others and making sacrifices for fellow men. A government appeal may induce them to observe economy and increase their savings for the greater good of the society.
(ii) Public Savings: The officers of the Islamic State function under a dual sense of accountability to worldly authorities and to Allah in the Hereafter. Hence the possibility of the misuse of state resources is diminished. The officials are the trustees of national property and wealth. So economy becomes their habit and a duty. Thus they always have a considerable amount of resources in hand. Furthermore, the Islamic State can increase its resources by levying taxes as and when required, provided that the tax-rate is just and its burden in greater part is thrown on wealthy individuals and classes.
(iii) Zakat and Ushr: Zakat and Ushr are also important sources of revenue for the Islamic State. The rate of Zakat and Ushr is so low that a large number of individuals in the society are able to pay these taxes. As a result the Government has a huge amount of funds at its disposal. However, it is obligatory to spend the resources of Zakat and Ushr only on those heads, which have been prescribed in the Holy Quran. Most of these heads of expenditure relate to financially weak individuals in the society. Zakat and Ushr funds may be used to carry out plans for the rehabilitation and economic betterment of these individuals.
(iv) Loans: The Islamic government can collect funds from the public through Qarz-i-Hasna (voluntary loans). Education and training can so strengthen the spirit of religion in the people that they would proffer voluntary financial cooperation to the government. Apart from the above-mentioned sources other means such as deficit financing may be employed to procure financial resources at the time of need provided that they do not result in inflation or any kind of negative effects.
(i) Earning mote Foreign Exchange by increasing exports.
(ii) Inviting Foreign Investment. However, the terms settled
with foreign investors should be such that:
(a) national interest is protected in every way, and
(b) foreign investment does not cause exploitation or political instability.
(iii) Negotiating loans from foreign countries or International
agencies under unavoidable circumstances. However, it is essential that the terms of these loans should be reasonable and not opposed to Islamic principles and values.
(iv) Aid from Islamic Countries: There are several Islamic countries in the world today which are blessed with abundant resources by Allah Almighty. These countries can fulfil the financial needs of each other in a spirit of cooperation. An economic union of these countries can best solve the problem of procurement of financial resources.
Related Economics Topics
- ECONOMIC PLANNING AND ISLAM
- Objectives of Islamic Policy of Economics
- Impact of Zakat on Savings
- Objectives of the Fiscal Policy of the Islamic State
- Role of State in Islam