Demand for reforming and reinventing the Planning Commission is gaining momentum…
What B R Ambedkar said about Constitutions is relevant to institutions as well. A bad Constitution can turn out to be good if people working it are good. Similarly, a bunch of bad people can make a mess of a good Constitution. However, while insisting on the Planning Commission’s irrelevance, one must resist questioning the motives of its creators as well as the competence of those who adorned its offices. The Commission’s congenital infirmities have proved to be too much to overcome for the very competent and conscientious people who have tried to make it work over the decades. Experience has proved that it is not workable. Consider the following points. First, the Commission adversely affected both our federal structure and Cabinet system of governance. It was created soon after the inauguration of the Constitution and promptly went against both its letter and spirit. The Centre encroached upon the States’ domain enumerated in the Seventh Schedule of the Constitution, wherein most matters crying for social and economic planning are entrusted with the States. This resulted in financial centralisation and the subsequent collapse of governance in States. The Commission became a handmaiden of the Prime Minister, who is its chairperson, with the Union Cabinet having no role in its workings. That’s why, one may recall, John Mathai resigned as India’s first Finance Minister, terming the Commission the “super cabinet”.
The Deputy Chairperson of the Commission approving State plans and doling out money to Chief Ministers is an annual spectacle. We tend to forget that the money the Centre thus gifts to States is actually States’ money, and the whole exercise is a mockery of the Finance Commission created by the Constitution to split resources between the Centre and States.
Secondly, the Commission’s ideology of Central planning with socialist flavour is anathema to constitutional ideology of decentralisation and the liberal framework of governance. The founding fathers relegated planning to the section on non-justiciable Directive Principles in the Constitution; they were also clear that the Centre had no role in determining how States governed themselves.
One could, however, argue—with some justification—that the Planning Commission does not become irrelevant just because it came into being through a Cabinet decision. The country has created several institutions over the decades through acts of Parliament or Cabinet resolutions, and many of them are working satisfactorily. Ditto is the point of infraction from constitutional ideology. Heavens will not fall if we deviate from the Constitution to advance one aim or the other of India’s governance. But herein lies the third point about the Commission’s questionable credentials in tackling social and economic problems of a complex country. Centralised planning’s one-size-fits-all dogma has been a bane. An employment guarantee scheme may not be relevant to some States but they still jump onto the bandwagon to claim their part of the resources. It is possible that a State Government might have come to power having promised a specific course of action. But the Commission, designed to go by the Centre’s policies and preferences, cannot accommodate the preferences of elected state Governments.
As the late Chinese leader Deng Xiaoping’s dictum goes, it does not matter whether the cat is black or white as long as it catches mice. It is not about ideology but the Commission’s utility. There is also a case for strengthening the planning process at State and lower levels. It is time we did away with a centralised, distant and impersonal entity called the Planning Commission.
As is well known, the Planning Commission was set up by the Government of India in March 1950. Its core objective was to promote rapid transformation of Indian economy and a speedy improvement in people’s standard of living. It was mandated to do so through five-year plans. The formulation of the plans and their execution were not supposed to be technocratic exercises, and the mandate included outlining the larger socio-political context. By all accounts, the first four plans provoked intense debates and considerable discussion—within academia, political and executive organs and also the public—on themes relating to India’s strategy of socio-economic transformation as well as on details of its economic policy. The Commission was taken seriously by advocates, critics and almost every shade of public opinion.
However, since the late 1970s disenchantment with the Commission has been growing. As the late Sukhmay Chakravarty, one of India’s outstanding economists who had over three decades of close association with the Commission, put it, “a kind of plan weariness” had set in by this time—both within the official establishment and outside it. The excitement over India’s experiment with planning was on the wane. The unkind remark that “members of the Planning Commission were a bunch of jokers”—attributed to the late Prime Minister Rajiv Gandhi—was symptomatic of the institution’s growing irrelevance in the larger scheme of India’s socio-economic transformation.
How this change happened has no easy explanation. The Commission’s contributions in planning theory and techniques were certainly at the cutting edge of relevant discourses anywhere in the world. In part, the growing redundancy of the Commission’s mandate had to do with inadequate engagements of its plans with India’s political economy. However, one suspects that the major reason for the growing diminution of planning per se and the Planning Commission for almost three decades, has to do with the assault of neo-liberalism on dirigisme (state control of economic matters). But such an assault could be disastrous for a country like India because the laissez-faire, or the “invisible hand” of the market, can hardly deliver the desirable socio-economic objectives set out at the time of the Independence. It may be useful to recall Sukhmay Chakravarty again: “There is a need for the ‘visible hand’ of planning, as many problems involving expansion and modification of the resource base require farsighted action which are beyond the decision horizon of private actors.” However, for all practical purposes, development planning and the Commission have become irrelevant, notwithstanding the contrary noise and self-importance that members of the Commission and other official spokespersons tend to invoke. The writing on the wall was quite clear and the recent pronouncements on behalf of the Union Government led by Narendra Modi are further confirmation. According to news reports, the Prime Minister will now have a “council of experts” to help in decision-making and the council is likely to “take over the job of unwieldy Planning Commission of India”. We may soon witness a silent burial of the Commission.
In recent years, questions have been raised over the relevance of the Planning Commission. After the BJP Government assumed office, corridors of power have been abuzz with speculation over the future of the Commission. Some State Governments, at least those under the BJP rule, are also questioning the relevance of State planning bodies. Vasundhara Raje Scindia’s BJP Government in Rajasthan has in fact scrapped the State’s Planning Commission and merged it with the Chief Minister’s Advisory Council.
Only time will tell whether the Rajasthan Government’s move will lead to better planning and policy implementation. But the Planning Commission does play a crucial role in developing a holistic approach to policy formulation in critical areas of development such as rural health, drinking water, energy security, and environment protection. The Commission works as an interface between the Finance Ministry and other Ministries, coordinating with them for expenditure allocations in sync with plans.
The Prime Minister is the Commission’s ex-officio chairperson. The agency has a nominated deputy chairperson, some key Cabinet ministers as its ex-officio members and some full time members who are experts in various fields. But with the appointment of Inderjit Singh Rao as the Minister of State for Planning with independent charge, there is speculation that the new Government might restructure the Commission—or even scrap it. Such speculation has gained credence amid reports that the Finance Ministry has asked Central ministries to send budget allocation proposals directly to it for approval, instead of routing it through the Planning Commission. There are also reports that the Prime Minister is contemplating a council of 10 advisers (drawn from sectors such as energy, agriculture, health, skill/education and economics). It is believed that the proposed council would be the final authority on policies and programmes initiated by Central Ministries. It is also thought that the new council will replace the Prime Ministers Expert Advisory Council (PMEAC) and would also take over the Planning Commission’s functions.
But the Commission’s main function is to formulate five-year plans in consultation with Central Ministries. If the Commission is scrapped, what will happen to the plans? The Commission needs to remain but with three major changes. First, it requires major revamping. The 10 experts Modi plans to hire in place of PMEAC could, in fact, be new members of the Planning Commission. Secondly, the Commission is an unwieldy organisation and downsizing it is a must. This would save a lot of resources and speed up decision-making. Thirdly, the agency has to bring in an innovative approach to planning so that Indiabecomes a manufacturing hub like China, and can generate employment for the increasing number of educated youth. This should include urgent implementation of significant reforms to replace the archaic Industrial Disputes Act of 1947, the Factories Act of 1948, Contract Labour Act of 1971 and the Land Acquisition Act 2013. For that the Commission should work with the States or even encourage them to individually carry out these reforms. This is in keeping with the spirit of our Constitution’s Federal structure.
The Planning Commission allocates money to Ministries. Chief ministers of States come to it to get their plans approved. It writes 1,000-page plans for the next five years, which it does not prepare in time, and which only researchers find useful. The Commission is a bunch of bureaucrats and talkers who have too little effect to actually get things done. The Commission is a Soviet-era hangover, making plans and allocating money. And of late, like Soviet propagandists, it has begun to suggest to citizens that they are much better off than they feel (the poverty line debate). These public perceptions, though harsh, are not wrong. If India did not have a Planning Commission already, would we set one up in 2014, and what would we expect it to do? These are questions for Modi’s Government. For some answers let us turn to California, which, with its grassroots democracy and vibrant entrepreneurs, is the anti-thesis of the Soviet Union. It would surprise many to know that California is developing a form of planning Commission, under an initiative called Think Long. This is considered necessary to balance the short-termism and populism inherent in electoral democracies. California’s infrastructure, its public services, its environment, and its public finances are suffering due to this short-termism and populism. Not surprisingly, democratic India has problems in the same areas: infrastructure, public services, the environment and public finances. The Think Long initiative proposes a long-term planning process guided by a small group of non-partisan thought-leaders. When 20 eminent Indians from various walks of life, including the private sector, were asked, four years ago, what should be done about fixing the Planning Commission, they proposed a similar solution.
India is a flotilla of mostly independent organisations—elected State Governments, private sector and political parties. They cannot be commanded to do what a bunch of experts at the Centre wants them to. Yet progress will be faster if they voluntarily move in the same broad direction towards the goals of the country. Why would the leaders of these organisations want to come to a body of experts at the Centre if those experts do not have the power to give them any money? They would come, they say, only if this body of experts gave them good suggestions with which they can improve their own performance. Indeed this is the existential fear the Commission has when it is confronted with the writing on the wall that the Rangarajan Committee has highlighted: the Finance Ministry should manage the Government’s funds and the Planning Commission should give strategic guidance to the executive. The Commission as it is currently organised and staffed is not equipped to play this role. What the stakeholders in India want, as in California, is a process by which they get insights into forces shaping the economy and society. They want suggestion on the paths they should guide their organisations towards, for their own success and for the progress of the whole flotilla. Systems’ thinking and scenarios (which the Planning Commission has used for the first time recently), rather than budgeting and financial allocations, are the principal means to guide change in an open economy.
Twenty-first century “think systems” and Think Long planners must anticipate the institutional reforms required for a society and economy as it changes. They must lead the public discourse and work with the executive to catalyse and guide the development of institutions. Numerical goals of GDP growth, reduction of poverty, improvement of health and education and creation of livelihoods, which are sprinkled across five-year plans, cannot be achieved without good institutions. Rather than trying to guess what the growth in the next few years may be if the institutions are developed, a more useful role for the Commission would be to accelerate the development of the institutions required. India, like California, needs a far more effective planning process.California would need to install one. The sooner we over- haul our antiquated process, the faster we will reach our goals.
“It is past its prime and relevance…”
D Shyam Babu is senior fellow with the Centre for Policy Research, New Delhi.
“It is facing existential crisis…”
Praveen Jha is professor of economics and chairperson of the Centre for Informal Sector and Labour Studies, School of Social Sciences, Jawaharlal Nehru University,New Delhi.
“Don’t dump, but revamp…”
P P Sangal is former director of the Central Statistical Organisation, then under the Ministry of Planning.
“We need Think Long system…”
Arun Maira has been a member of the Planning Commission of India and chairperson of Boston Consulting Group, India.