Illustration: Jayachandran/Mint
Illustration: Jayachandran/Mint

Arun Maira | India’s reluctant reformers

The planning process is locked in an outdated model within an inappropriate organization structure

What is the purpose of a “Planning Commission" for India in the 21st century? In a just-released book, the author, a former cabinet secretary, complains that the incumbent deputy chairman of the Planning Commission has failed to dismantle it! The parliamentary standing committee for finance and planning has called for an evaluation of its utility.

The truth is the Planning Commission has reviewed its purpose and functions. It asked a diverse group of 20 eminent Indians, including industry leaders, members of Parliament with experience of governance, and former governors of the Reserve Bank of India and cabinet secretaries, for their views. The consensus was that 21st century India needs a planning process, but does not need a planning “ministry" which the planning “commission" has morphed into. The experience of other countries and the institutions they have created to guide their long-term development were also examined. The conclusion is that all countries need processes and institutions to guide their long-term development.

Jeffery Sachs says in The Price of Civilization, “The sad truth about Washington today is that we lack serious institutions charged with carrying out systematic planning for the future…Issues such as energy, climate, water, demographic change, and so forth are either neglected or chopped up into the work of several different parts of the government." He says the “anti-planning mentality" of the US establishment is aggravated by the short-termism caused by two-year election cycles. India has similar problems: huge systemic challenges such as a weak industrial base, inadequate rate of job creation, insufficient energy and depleting water sources. It also has political processes with very short horizons that seem to be in election mode all the time. There was a consensus amongst the Indian leaders who were consulted that the country needs a process, like a radar system, which shows the flotilla of inter-dependent agents—state governments, the private sector, the multiple central ministries, and political parties—the forces shaping the country’s future and pathways through them they should follow.

Many countries have planning processes to guide their progress, some with and some without a central planning body like India’s. China, Korea, Japan, Germany, Mexico, Malaysia, and South Africa are examples. So India’s persistence with planning is not an anachronism as it is often made out to be. What must change and has not is the way India is conducting planning. China, which initiated central planning at the same time as India (both countries are into their 12th Five-Year Plans), changed its state planning commission into the national development and reforms commission in 1998. South Korea also began central planning at the same time as India. Whereas it has notably evolved its planning process, India’s has been “locked in place", as Vivek Chibber says in his book, contrasting the histories of the two countries’ planning processes, Locked in Place: State-Building and Late Industrialization in India.

India’s planning process is locked in place with an outdated model of planning. It is also locked within an inappropriate organizational structure. The principal functions of the prevalent Indian model of planning are fixing targets in five-year blocks, allocating financial resources for ministries and states, and some oversight of implementation. In a rapidly changing environment, planning must become more dynamic. When outcomes have to be produced by the actions of many who are not dependent on centrally allocated funds, as is the case now with a very large private sector and with states raising and investing their own resources, allocations of limited “plan" resources are hardly sufficient to produce the desired national outcomes. Many players have to be motivated and their actions aligned. Noting the changes required in the Planning Commission, the prime minister charged it in 2010 to become a “system reforms commission", rather than an allocator of funds. And to become “an essay in persuasion" to motivate actions by many over whom it has no authority and to whom it gives no resources, rather than a writer of bulky plan documents and a reviewer of others’ proposals.

The Planning Commission’s internal systems are run on the lines of a government ministry. It has a secretary like all other ministries. The secretary reports to the deputy chairman who is a “minister" with independent charge. All officers in the planning “ministry" report to the secretary. Members of the Planning Commission are ranked as “ministers of state" for protocol purposes, and like ministers of state in other ministries they have no say in the appointments, transfers, evaluations, and quality of the staff in the divisions they are notionally responsible for. Thus the organization is run like a “ministry" albeit with a “commission" of a few full-time members attached to it. These members are expected to deliver high-quality guidance on the subjects assigned to them and to change the ways in which the Commission engages with the country and plans for its progress. They do not have the resources to do this.

Arun Maira is a member of the Planning Commission. His book, Redesigning the Airplane While Flying: Reforming Institutions, will be released in April.

How will the organization be re-oriented without adding resources? Part two will explain this.

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