End of Planning Commission
5 min read . Updated: 02 Sep 2014, 12:17 AM IST
PremiumIf the policy paralysis of last UPA was any indication of why the economy came to a standstill, the Planning Commission is hardly to be blamed
For those expecting bold reforms by the government, the announcement to scrap the Planning Commission by Prime Minister Narendra Modi on Independence Day is perhaps the strongest signal of changing priorities. Seen as a relic of the Nehruvian socialist regime, the end of the Commission may only be symbolic but it does raise the obvious question of what next. The confusion on this is obvious with the government seeking suggestions from the public but also asking the same old mandarins of the erstwhile Commission on what needs to be done.
While the media-driven public opinion was certainly that the Planning Commission symbolises all the failures of policymaking, it was not based on any concrete assessment of why policies failed and who was responsible for it. If the policy paralysis of last United Progressive Alliance (UPA) was any indication of why the economy came to a standstill, the Planning Commission is hardly to be blamed. Most of the scams that were unearthed and seen as essentially the reason for the policy paralysis had nothing to do with the Commission. Be it the telecom spectrum, coalfield allocation, Commonwealth Games or the numerous scams which characterized the process of policymaking in the country, the onus of decision-making rested with the Prime Minister’s Office (PMO) rather than the Planning Commission.
Nor can the Commission be blamed for the unprecedented spell of inflation that has continued to be a problem even for this government in the short period that it has been in existence. The Commission certainly was not Reserve Bank of India (RBI), entrusted with the task of bringing inflation down. But even for the retrospective taxation, which industry and companies felt to be the reason for lack of investment, the Commission had no role. While it did not have any role in fiscal policy, monetary policy or the allocation of natural resources, for public imagination the Planning Commission was the culprit and not the PMO, RBI or the finance ministry.
And, contrary to public opinion, the Commission was not the body which initiated or enacted the so-called social sector legislation or programmes that have come to represent the vestiges of Nehruvian planning era in the last 10 years of UPA. None of these laws, including the Right to Information, national rural employment guarantee scheme, national food security or land acquisition, had their origin in Planning Commission. Almost all of these originated in the meeting rooms of the National Advisory Council with the Planning Commission playing the opposition most of the time.
The irony is that most commentators have little clue to what exactly did the Commission do. It certainly acted as an expert advisory office of the Prime Minister (since he is the chairperson of the Commission). But it also acted as the secretariat of another important body in our federal structure, which is the National Development Council (NDC). The other important part was the mediation between centre and states as far distribution of central resources for state plans are concerned. Last but not the least, it also acted as an expert body for evaluation of various programmes. Even the strongest critique of policymaking in the past 10 years would not suggest the current policy paralysis is because of the failure of the Commission to perform its responsibilities.
As far as the principal role of plan making, it is hardly anybody’s claim that the past 10 years, barring last two years, have not been the best years of growth for the economy. It is also the period of the highest reduction in poverty ever seen since Independence. So is the performance of the economy on the agricultural front with farm growth reviving to more than 3.5% per year compared with the less than 1.5% rate of growth of economy during the National Democratic Alliance (NDA) rule of 1998 to 2004.
It certainly did act as a catalyst for many of the interventions that the current government is keen to take credit of. The idea of the direct benefit transfer and the urgency for financial inclusion, including the banking correspondent model, were incubated by the Commission. The current government has merely rechristened and expanded it. So is the case of the Aadhaar-based unique identification project which the government has adopted after opposing it all the while.
But it also failed on many occasions. It certainly exceeded its brief as far as its stubbornness to use the poverty caps for targeting of government benefits was concerned. It also failed to read the nature of employment challenge that accompanied the high-growth years of the first UPA. Not only did it fail to recognize jobless growth but also failed to respond to the employment challenge. But then, some of these are also collective failures and achievements of the previous government, whichever way you look at it.
The issue is not whether the Commission should be scrapped or not. As has been indicated by the government, it may reappear in another form. And as the famous saying by Deng Xiaoping goes, “It doesn’t matter whether a cat is white or black, as long as it catches mice." In any case, institutions are as much a product of historical evolution as much as they are of contemporary social realities and the ideology of the current government. But given the complexity of federal structure of decision-making between states and centre and the social reality of high poverty, high malnutrition and high deficit of access to basic services such as health and education, the idea of planning and an institutional framework to deal with these challenges may still be relevant.
But a far more fundamental issue is whether the government knows what needs to be done. That should be based on a concrete analysis of where did policies fail and what could be done to correct them. The Planning Commission may have been sacrificed for all that it did not do, but the short experience of 100 days of this government hardly gives any confidence about the priorities of this government so far as the important task of economic recovery is concerned.
The author is assistant professor, Jawaharlal Nehru University, and visiting fellow at Centre de Sciences Humaines.
