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CA Foundation · Business Economics · Indian Economy

Which of the following best describes 'indicative planning' as practised in India after 1991?

Indicative planning means the government sets broad national goals and nudges private businesses toward them through incentives and policy signals rather than compulsion. It differs from imperative or command planning, which fixes mandatory targets and relies on state ownership, and from having no planning at all.

  1. AThe state sets compulsory production targets for all private firms
  2. BThe state sets broad goals and guides private decisions through incentives and policy signalsCorrect
  3. CThe state owns all means of production and allocates resources by command
  4. DPlanning is abandoned and prices alone allocate resources

Explanation

Indicative planning sets broad targets and uses incentives, fiscal and monetary policy to steer private actors rather than issuing compulsory orders. Compulsory targets and state ownership describe imperative or command planning, while abandoning planning entirely is not indicative planning.

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