Indicative Planning: Definition, Benefits & Implementation

Indicative planning is a planning process in which the government establishes broad objectives and priorities, but leaves the specific means of achieving them to the discretion of individuals and private sector organizations. The indicative planning process is characterized by a high level of flexibility and adaptability.

Indicative planning is usually more effective in cases where long-term planning and the coordination of activities across multiple industries and sectors of the economy are required.

It is in particular contrast with directive planning as employed in the former Eastern bloc, in which the government dictated precise output, investment and pricing decisions.

Indicative planning was extensively employed in France from the 1950s to mid 1980s. France created a national planning agency (Commissariat Général du Plan) in 1946. The agency established broad economic goals and coordinated investments within the private and public sectors, however did not directly control most economic activities. French indicative planning was largely inspired by the Dutch Central Planning Bureau (CPB), which was in operation since the 1930s.

The concept of indicative planning had roots in socialist theory. In the Soviet Union it found its manifestation in the form of the Gosplan, which attempted to centrally plan the entire national economy. In countries such as India indicative planning was attempted on a decentralised basis, with some degree of control provided by the government, but ultimately a free market model.