Process of Plan Formulation in Nepal

Planning is an essential tool of economic development for developing countries like Nepal. While formulating a plan, it should be clear which sector should be given priority and what should be the primary objectives, targets, and policies. In Nepal, National Plan Commission (NPC) formulates a plan under the direction of the National Development Council. In other words, National Development Council directs the National Planning Commission to formulate a plan.

The process of plan formulation in Nepal consists of the following steps:

a. Study of existing situation: The prerequisite of formulating sound planning is studying the existing situation of the economy. For this, the condition of existing and potential resources, fiscal sectors, human resources, etc., are thoroughly studied. Likewise, a past plan implemented by the government is thoroughly evaluated; the plan's shortcomings and drawbacks are also studied. This provides information about the condition of the economy.

b. Objectives: After studying the existing situation of the economy, the planners formulate the broad objectives of the plan clearly and concisely. These objectives should be stated in as fewer words as possible. The nature of development objectives depends on national preferences and the country's stage of development. The objectives of a plan may differ from country to country.

It has been found that developing countries very often incorporate high-sounding development objectives in their national plans but do little or nothing. Nepal is an outstanding example. Objectives related to the expansion of employment opportunities, promotion of welfare, and reduction of poverty figure prominently in Nepal's plans but these objectives do not materialize much.

c. Plan targets: The next step is to quantify the development objective of the plan. When an objective is quantified, it is transformed into a target. For example, the plan's objective may target increasing the country's per capita income. However, merely specifying the objective does not pay. The planners have to quantify the rate of increase in per capita income, say 5% per annum. Thus, the target expresses the goal.

d. Mobilization of resources: The next step is deciding the vital investment questions for the development of the national economy. Various internal and external resources help finance a plan. The plan should specify such policies and instruments for mobilizing resources to accomplish the plan's financial outlay. The policies and instruments should encourage corporate and household savings in the private sector.

e. Proper development policy: The state should lay down a good development policy for the success of a development plan. The sectoral policies started in the plan should avoid any pitfalls that may emerge in the development process. The policies may be related to price, tax, improving the legal framework of economic activity, helping to create more and better markets, security exchange, banking, insurance, etc ., each promoting and increasing savings, both private and public.

f. Implementation and evaluation: The implementation of a plan is as crucial as its formulation. Implementation and evaluation are related to the study of the impact of planning. In Nepal, the plan is implemented by National Planning Commission. The main executors of plans in Nepal are ministries. Planning units composed of different ministries prepare the annual and periodic programs.