Daily Quiz #14 UPSC Prelims Marathon – July 16, 2019

Explanation: The planning process followed by the state economies (i.e., the socialist or communist) is known as the imperative planning. Such planning is also called as directive or target planning. Such planning had two main variants. In the socialist system, all economic decisions were centralised in the hands of the state with collective ownership of resources (except labour). In the communist system (i.e., China of the past) all resources were to be owned and utilised by the state (including labour). Thus, communist China was the purest example of such planning. In the case of the Soviet Union a little bit of ‘market’ did exist—even after the collectivisation of agriculture was enacted by Stalin in 1928 only 94 per cent of Soviet peasants could be included in the process. Basic features of such planning are as under:
(i) Numerical (i.e., quantitative) targets of growth and development are set by the plan. As for example, five lakh tonnes of steel, two lakh tonnes of cement, 10,000 kms of national highways, 5,000 primary schools, etc., will be produced/built in the coming 5 or 6 years.
(ii) As the state controls the ownership rights over the resources, it is very much possible to realize the above-cited planned targets.
(iii) Almost no role for the market, no price mechanism with all economic decisions to be taken in the centralized way by the state/government.
(iv)No private participation in the economy, only the state plays the economic role.

Explanation: The World Bank’s World Development Report, published annually since 1978, is an invaluable guide to the economic, social, and environmental state of the world today. Each report provides in-depth analysis and policy recommendations on a specific and important aspect of development—from agriculture, the role of the state, transition economies, and labor to infrastructure, health, the environment, and poverty. Through the quality and timeliness of the information it provides, the report has become a highly influential publication that is used by many multilateral and bilateral international organizations, national governments, scholars, civil society networks and groups, and other global thought leaders to support their decision-making processes. This corporate flagship undergoes extensive internal and external review and is one of the key outputs of the World Bank’s Development Economics unit.

Explanation: The credit of proposing the first blueprint of Indian planning is given to the
Popular civil engineer and the ex-Dewan of the Mysore state, M. Visvesvaraya. In his book The Planned Economy of India, published in 1934, he outlined the broad contours of his plan proposal. His ideas of state planning were an exercise in democratic capitalism (similar to the USA) with emphasis on industrialization—a shift of labor from agricultural to industries, targeting to double the national income in one decade. Though there was no follow up by the British government on this plan, it aroused an urge for national planning among the educated citizens of the country.

Explanation: Governments of the socialist or the planned economies were urged/suggested to privatize and liberalize, to sell off state-owned companies and eliminate government interventions in the economy. These governments were also suggested to take measures which could boost the aggregate demand in the economy (i.e., macroeconomic stability measures). The broad outlines of such a development strategy were regarded as being inspired by the Washington Consensus. This consensus is broadly termed as the popular meaning of the ‘economic reform’ followed by almost all the socialist, communist and planned developing economies during the 1980s in one form or the other-the term economic reform got currency around the world during this period. The term was usually seen as a corollary for promoting ‘naked capitalism’, openness in the economy and an open attitude towards foreign investments, etc. The governments of the developing economies were criticized by the political parties in the opposition and the critiques for being soft to the dictates of the IMF and the WB, and becoming a party to promote ‘neo-imperialism’.

Explanation: Under the Extended Fund Facility (EFF) programme of the IMF, countries get external currency support from the fund to mitigate their Balance of Payment (BoP) crisis, but such supports have some obligatory conditionality’s put on the economy to be fulfilled. There are no set rules of such conditions already available with the IMF, though they are devised and prescribed to the BoP crisis- ridden economy at the time of need.