a. Plans require projects -

Development of a sound plan for an area or country requires a great deal of knowledge about existing and potential projects. This is obvious enough for a short term operational plan (l -5 years) which must, contain firm and realisable plans and for a perspective plan (10-15 years) which is medium term sketch of economic developments in quantitative form. The perspective plans lay down target rates of growth for gross national product, consumption, and also for investment and its financing by both domestic and foreign savings. These plans should be based on realistic assumptions about the amount of investment and output, which will flow when; capacity operation is achieved (the capital-output ratio). The extent of realism of such plans depend upon the knowledge of the rate at which good projects can be planned, designed, built and brought to capacity operation. It also depends upon the knowledge of the capital-output ratios expected in different sectors of the economy. Such knowledge can be gained by'studying the investment and outbut'trends in other econ01hies especially the industrialized economies. While using experiences of such countries allowance should be given.

for the fact that cOsts are usually higher than expected, and outputs lower, in developing countries than they are in industrialized countries. Often the capacäy to develop sound pmjects is overestimated, while the time-period required for their planning, is underestimated in developing countries. In short, if a plan is to be consistent and feasible, the caitical appraisal of projects that have already been constructed within the country is needed. A number of feasible plans may be developed but choosing the best ark»ng them is a difficult task. The govemment must continuously to direct investment to those sectors where it will yield the most in order to reach this optimum