It is planning where the formulation and implementation of the plan is made by the central planning authority. The central agency is held responsible not only made by the central planning authority. The central agency is held responsible not only for the preparation of the plan, but also of its implementation and execution in a definite manner. Here once the plan is drawn, then it is enforced. Accordingly, such plan is also given the name of direction planning.
This enforcement of the plan may be made through command system or price mechanism. Thus a set of directions are made issued to economic units like firms etc. to fulfill the plan targets. Accordingly, it becomes the duty of the state to provide necessary supplies like raw material, machine, manpower and entrepreneurs as all such resources are owned by the state. If imperative planning is made through price system, then an integrated price structure is evolved to ensure that resources will be utilized in accordance with the plan picture. In the earlier phases of Russian planning directive method was followed; but with the passage of time role of price system has also increased in connection with the imperative planning, particularly after the disintegration of Soviet Union.
This enforcement of the plan may be made through command system or price mechanism. Thus a set of directions are made issued to economic units like firms etc. to fulfill the plan targets. Accordingly, it becomes the duty of the state to provide necessary supplies like raw material, machine, manpower and entrepreneurs as all such resources are owned by the state. If imperative planning is made through price system, then an integrated price structure is evolved to ensure that resources will be utilized in accordance with the plan picture. In the earlier phases of Russian planning directive method was followed; but with the passage of time role of price system has also increased in connection with the imperative planning, particularly after the disintegration of Soviet Union.