<P> Joseph Schumpeter, an economist associated with the Austrian school and Institutional school of economics, argued that the changing nature of economic activity--specifically the increasing bureaucratization and specialization required in production and management--was the major reason for why capitalism would eventually evolve into socialism . The role of the businessman was increasingly bureaucratic, and specific functions within the firm required increasingly specialized knowledge which could just as easily be supplied by state functionaries in publicly owned enterprises . </P> <P> In the first volume of Capital, Karl Marx identified the process of capital accumulation as central to the law of motion of capitalism . Increased industrial capacity from increasing returns to scale further socializes production . Capitalism eventually socializes labor and production to a point where the traditional notions of private ownership and commodity production become increasingly insufficient for further expanding the productive capacities of society, necessitating the emergence of a socialist economy where the means of production are socially owned and the surplus value is controlled by the workforce . Many socialists viewed these tendencies, specifically the increasing trend toward economic planning in capitalist firms, as evidence of the increasing obsolescence of capitalism and inapplicability of ideals like perfect competition to the economy; with the next stage of evolution being the application of society - wide economic planning . </P> <P> State development planning or national planning refers to macroeconomic policies and financial planning conducted by governments to stabilize the market or promote economic growth in market - based economies . This involves the use of monetary policy, industrial policy and fiscal policy to "steer" the market toward targeted outcomes . Industrial policy includes government taking measures "aimed at improving the competitiveness and capabilities of domestic firms and promoting structural transformation ." </P> <P> In contrast to socialist planning, state development planning does not replace the market mechanism and does not eliminate the use of money in production . It only applies to privately owned and publicly owned firms in the strategic sectors of the economy and seeks to coordinate their activities through indirect means and market - based incentives (such as tax breaks or subsidies). </P>

The basic aim of economic planning in india is promoting