The price mechanism cannot by itself solve the basic problems in a developing economy because:
(i) The forces of market supply and demands do not represent the economic needs of all the people equally. They represent the interests of those who have a greater purchasing power and can spend more.
(ii) Market mechanism may not serve social purpose as it represents only, consumer self interest. As a consumer, an individual would like to pay low prices and low tax. But our social considerations may be quite different and would recommend higher rates to raise more resources for development of the economy.
(iii) Investment in social and economic infrastructure is very large and they have a very low rate of return. Therefore they are not taken up by the private sector.
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Thus a developing economy needs the planning mechanism also to bring about a rapid economic development and social justice.