Decentralization:Top down planning and bottom up planning
Decentralised planning is a kind of percolation of planning activities or process from the Centre to the sub- state levels, i.e., district, sub-division, block and village level. Since the inception of First Plan, the importance of decentralised planning was emphasised in order to achieve active people’s participation in the planning process.
Top down planning
Pros
- Economic planning is assumed to modify the restraining influence of limited resources by recognizing the existence of particular constraints and by choosing and coordinating investment projects so as to channel these scarce factors into their most productive outlets.
- Planning is necessary to take care of the poor and the downtrodden who have little asset endowments to benefit from the natural growth of economic activities. Poverty alleviation programmes have definitively helped in reducing poverty and generating employment.
- Planning process manages the flow of resources across regions for accelerated removal of regional disparities and thus brings about integration of such regions into the mainstream of economic activity in the country.
- Public sector investment has a major role to play in strengthening of the physical infrastructure, i.e., energy, transport, communication and irrigation etc. in order to support the growth process on a sustainable basis.
- It is the Government and its planning process which is adequate for protecting environment, forest and ecology.
Cons
- This economic system sees planners not being able to accurately predict shortages, surpluses and consumer preferences, which entails that they cannot also allocate resources efficiently. This would result in some areas having abundance of goods that cannot be sold and other areas experiencing shortages. On the other hand, a free market allocates resources based on the price system, making sure they will go where demand and supply are dictated.
- Opponents say that this system will lead to dissent among citizens, as their basic right of free will is going to be challenged. This means that it will eventually lead to the citizens revolting against the government.
- It has been observed that a centrally planned economy can stifle economic freedom, as citizens would have no incentive to take entrepreneurial risks or innovate. As you can see, central planners suppress the profit motive by considering decisions from entrepreneurs and transferring them to the state. As economists believe, society functions best when the economy is guided by invisible hand, which rewards personal economic freedom, but central planning restricts this strategy.
Bottom up planning
Pros
Following are some of the important functional factors responsible for adoption of decentralised planning in the present context in India:
- Considering the huge size and proportion of rural population in India, it is felt that proper linkages must be established between dispersed small villages and also between such villages and adjacent small towns by developing appropriate infrastructural facilities such as feeder roads, improved transport facilities, marketing and storage facilities, health and sanitation facilities and other welfare centres. Under decentralised planning better linkages between villages and small towns can be developed under local conditions, priorities and resources.
- Decentralised planning is considered as more realistic as it maintains a close coordination between locally available resources, local skills, local manpower and local requirements. It is considered as a flexible one as it is easily adjustable and adaptable under the changing local conditions and requirements. Moreover, it is considered as the practical one as it can fulfill the normal requirements of the rural population. Adaptation and flexibility of planning largely depends upon the environment prevailing in each region and sub-region. Thus decentralised planning can achieve the best result in implementing plan projects at the local level.
- Decentralised planning is suitable for the development of agricultural and allied activities such as animal husbandry, horticulture, fisheries, forestry along with development of village and cottage industries.
- Decentralised planning can promote active participation of local people in implementing various local plans and programmes. Thus it can enhance the involvement of local communities in such development activities.
- Under decentralised planning, wastage of resources can be reduced to a minimum level as the people participating in these developmental activities keep a close watch over the utilisation of fund as well also on the implementation of plan projects.
- Decentralised planning can show more trickle down or percolation effects in respect of poverty alleviation programmes and employment generation in rural areas as in this type of planning, various projects are selected for generating huge productive employment opportunities in the rural areas.
- Decentralised planning is helpful in raising the level of social services by launching various programmes of health, nutrition, drinking water, education etc. in a more effective, quicker and sustainable manner.
- Decentralised planning is more helpful in utilizing the various non-conventional energy sources such as solar power, wind, animal and plant wastes etc. in rural areas. Such utilisation of non-conventional energy sources requires various agencies which can work in close association with communities in villages and small towns and also can provide necessary technical and financial support from such agencies. Decentralised planning can pave the way for utilisation of such resources.
Cons
- Decentralisation may lead to the problem of co-ordination at the level of an enterprise as the decision-making authority is not concentrated.
- Decentralisation may lead to inconsistencies (i.e. absence of uniformity) at the Organisation level. For example, uniform policies or procedures may not be followed for the same type of work in different divisions.
- Decentralisation is costly as it raises administrative expenses on account of requirement of trained personnel to accept authority at lower levels. Even the services of such highly paid manpower may not be utilised fully, particularly in small organisations.
- Introduction of decentralisation may be difficult or may not be practicable in small concerns where product lines are not broad enough for the creation of autonomous units for administrative purposes.
- Decentralisation creates special problems particularly when the enterprise is facing number of uncertainties or emergency situations. The decision-making process gets delayed and even correct decisions as per the changing situations may not be possible.