Recent Approaches to Planning in Ceylon

An ideal system of economic planning is generally thought of as comprising at least three separate sorts of economic plan which should enjoy a kind of simultaneous and peaceful existence. The three sorts of plan are distinguished by the different time horizons to which they relate: long-term perspective plans extending over a period of at least ten years and beyond, medium-term plans covering three to five years usually, and the annual plan. In the ideal system the medium-term plan would derive from the long-term perspective plan, and the annual plan in turn would serve as the vehicle for the implementation of the medium-term plan. This process of successive deviation is important because of the way in which time affects the behaviour of sectoral outputs in an economy. In the preliminary exercises that planning organisations carry out, it turns out usually to be the case that the achievement of a desired long-term growth target is sensitive to the achievement of certain critical levels of development in key sectors over the medium term. A failure to achieve these critical levels would result in a departure from long-term goals by a more or less wide margin. The medium-term plan thus becomes the essential instrument for ensuring that development proceeds along the lines envisaged over the longer term, containing both the crucial ‘core’ investment package which would have to be preserved in the interests of the longer-term perspective, and a ‘peripheral’ package where failure may not be unduly critical. Such a medium-term plan, while not needing to make this distinction explicit, would have to contain sectoral output and investment targets, both phased annually, though usually with greater project detail for the public sector. It would in other words be cut up into annual slices.