Monday, August 25, 2014

Can India do better without Planning Commission

It is not first time any Prime Minister of India talked about dismantle of Pllaning Commission. The commission was formed by a resolution of the Government of India March 15, 1950, the commission started presenting the Five Year Plans from 1951 -- disrupted a few times by the India-Pakistan war and drought. Currently, the panel is overseeing the 12th such plan, 2012-17. Prime Minister Nehru was its first chairman, with Gulzarilal Nanda as the deputy and V.T. Krishnamachari, Chintaman Deshmukh, G.L. Mehta and R.K.Patil as members.

High priests of the commission in the 1960s and 1970s opposed every transformative initiative, including the Green Revolution and Milk Revolution. Between 1960 and 1980, Malawi grew faster than India. The political economy has witnessed multiple seizures and failures. The concerns of the First Five-Year Plan continue to be voiced in the 12th Plan.
Yet the commission survived. Rajiv Gandhi called those at Yojana Bhavan “a bunch of jokers”, but he couldn't dismantle the commission or the “command economy”. The irony is that the Planning Commission outlived license Raj and thrived two decades after P V Narasimha Rao had liberated the economy

Milton Friedman who authored the first of obituaries on the idea of a planned economy. Friedman, who visited India to study the mixed economy at the invitation of Jawaharlal Nehru, wrote, “A standard cliché is that India must compress into decades what took other countries centuries. There is, of course, much merit to this position.” His conclusion: “India will stretch into centuries what took other countries decades.” And that is what transpired.
It would be tempting to blame Nehru, his idealism, the romance of Fabian socialism. It was not just that. Nehru was also swayed by fact—the defeat of industrialized Germany in World War II by a young USSR which owed its success to central planning. The commission owed its genesis to a blinding illusion of the times. Among the most globalized economies till the 1800s, India’s rulers chose to place faith in the religiosity of “government knows best” nurtured by high priests led by P C Mahalanobis. Under Lal Bahadur Shastri, the Planning Commission was cut to size but his successors restored authority. Thereafter, the commission—despite failures—continued to define and decide the process of development.
It was a flawed construct. The Centre allocated resources, the Planning Commission monitored/regulated/directed the deployment, and the states were tasked with implementation. The Centre had no responsibility to deliver, the commission no power to enforce and the states who had little say or incentive felt dumped upon. The Planning Commission represented a multi-polar disorder in the structure of governance.
The good news is that it has been declared dead. The worry is that news of its death may be greatly exaggerated. One hears the government is replacing the commission with a new alphabet soup called NDRF, the National Development and Reforms Commission. Would it be a clone of the Chinese NDRC? The Chinese avatar has a 15-point charter of 1,180 words ( and is charged with the responsibility of everything from “strategies of national economic and social development, annual plans, medium and long-term development plans” to “administration of the State Grain Administration and the National Energy Administration”. Hopefully, the Modi Sarkar is not inventing a mutant.
It is abundantly clear that top-down models militate with the idea of federalism. The critical point here is that the think tank must assimilate, fund, explore ideas—both bottom up and top down. The needs are many… mentorship of large infrastructure projects, evaluation groups that can objectively assess policy, auditors to produce outcome reports on government spending, methods for real-time updating of social and economic indicators. India also needs a body to rank states for unemployment, for inflation management, delivery of services and investment so there is competition.
There is also great case for sharing best practices and new ideas. The Gujarat government set up a pilot project that deployed satellite imagery and an SMS service to tell its fisherfolk where schools of fish could be found. The induction of technology enabled better incomes. Can this idea be replicated in all coastal states? Tamil Nadu has successfully implemented policies that enable and encourage a higher ratio of women in the workforce. Can other states follow? What are states in the Northeast doing right to curb malnutrition? How is Himachal Pradesh ramping up literacy? Can Uttar Pradesh learn horticulture from Maharashtra? There are global practices too—in skills training—which need to be absorbed. One in four mariners in the world is from the Philippines. Can India with a 7,500 km coastline learn?
The dismantling of the Planning Commission offers an opportunity to create a platform for ideas, for evolving solutions to seemingly intractable issues, for designing systems to enable implementation.
1)     It is good to get rid from a Planning Commission where the likes of Montek Singh spent lacs on building toilets for selected few in hi staff with security systems, and decided that Rs.27/day was enough to live on!!

2)     Planning for short medium and long term is indispensable. Planning for nation building must happen at grassroots level across the country and not vested in a body which has their head in the clouds

3)     Finally get rid of dynasty created bodies. The license raj and planning commission with corruption and dynasty rule has failed India.

4)     The Planning Commission itself is not what it was in the era of highly centralized, predominantly public sector-led planning. 

5)     The Commission’s role is now largely limited to formulating long-term growth plans, devising sectoral targets for meeting these, and acting as an intermediary between the States and Central Ministries.

6)      Its approach, too, has changed to one of ‘indicative planning’; aiming at indirectly influencing decisions by market players rather than fixing mandatory production quotas.

7)     It will respect the country’s federal structure and emphasize public-private partnerships (PPP)

8)     The internal situation of the country has changed, global environment has changed... If we have to take India forward, then states will have to be taken forward. The importance of federal structure is more today than it was in last 60 years

9)     Creative thinking is required for building a new India with public private partnership and optimum utilization of resources and power to the states.

10)  It is very good idea. Planning has become outdated concept now. There is a need to modernize it. We have to see the blueprint of the new concept. But change was very much required as former Planning Commission member Bimal Jalan said.

11)  Several states have complained that the plan panel, which more or less approves their annual plans, misuses its discretionary powers, even acting and taking biased politically motivated decisions.

12)  It is clear the Planning Commission in its current form and function is a hindranc
e and not a help to India's development," said the Annual Planning Commission Report of 2014

13)  It is not easy to reform such a large ossified body. It would be better to replace it with a new body that is needed to assist states in ideas, to provide long-term thinking and to help cross-cutting reforms," it said.

14)  Planning Commission has defied attempts to reform it to bring it in line with the needs of a modern economy and the trend of empowering the states, it is proposed that the Commission be abolished

15)  India is a complex and diverse country and the need of the hour are convergent solutions that take a holistic view of problems while ensuring India’s development and growth are aligned with the interests of every State, city and village.

16)  The need of the hour is also to engage intellectual talent from outside the system of government so out-of-the-box ideas can emerge.

17)  This new institution should be tasked to come up with solutions that reflecting convergent thinking that put India’s interests above partisan and parochial considerations. 

18)  This new institution should also be challenged to ensure the solutions it comes up with reflect the interests of the States keeping with the Federal Spirit of our Constitution. 

19)  This new institution could also bring about a marked change in the culture of governance where Ministries and Departments will cease to operate in silos or at cross purposes

20)  It could also mark the end of centralized planning and one-size-fits-all solutions being scripted from Delhi

21)   It could factor local conditions and constraints to recommend solutions best suited to local needs for different parts of India.

22)   India though does need to engage stakeholders and innovators in governance in policy, on one platform

Narendra Modi should make the radical decision that the new institution will not be headquartered in Delhi while imbuing with fresh blood and younger thinking. He should also ensure it has a federal organizational structure so that a solution design is decentralised while learning and sharing of best practices happens without any barriers.
Lastly, this new institution should aspire to take a long-term view of India’s challenges and think out of the box to bring innovation and best practices from across India and across the globe while adapting them to Indian conditions.

                        Sources: The Hindu, Niti Central, the Citizen, Indian Express, Times of India.

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