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Can the Planning Commission be reinvented? by Sanjeeb Mukherjee, Indivjal Dhasmana & Vrishti Beniwal

Caught in the middle of a maelstrom of controversies, the Planning Commission has been accused of being disconnected from ground realities. Its 12th Plan hopes to fix that.

A short while ago, the Congress general secretary and scion of the Nehru-Gandhi dynasty, Rahul Gandhi, remarked that members of the Planning Commission are not in touch with the ground realities in India. He could have been somewhat influenced by his father, former Prime Minister Rajiv Gandhi who had famously called the Commission ‘a bunch of jokers.’

The Gandhis’ seem to have started a trend of sorts. Several weeks ago, the Commission reached its reputational nadir when it was attacked from various quarters for submitting to the apex court, a brief that suggested that anyone spending more than Rs 32 in urban areas and Rs 26 in rural parts in a day is not poor. This incendiary statement enraged people across the country who felt it was a preposterous suggestion. It took deputy chairman Montek Singh Ahluwalia to actually come forward and assure the nation that social welfare programmes of the Centre would not be linked with this so-called poverty line in order to calm things down.
 
However, the fundamental issue that has been ignited by the BPL debate is whether the Planning Commission(PC), the country’s apex think-tank on policy-related issues and a body for interface between states and the Centre, has a future in the way the nation develops.

The main role of the Planning Commission is to allocate funds for projects and schemes, whose underlying aim is to help in the developmental process and to promote a rapid rise in the standard of living of Indians. This is done by the efficient exploitation of the resources of the country to promote inclusive development via the delivery of public goods and services. From planning of roads to figuring out how much to fund programmes like NREGA, decisions need to be taken in order to allocate public funds to States, along with blueprints for implementation and monitoring.

Yet, many consider the Commission an ossified body with a considerable lack of innovative thinking. “It is difficult to find any major innovative social sector scheme — whether it is food, health, employment or education — whose intellectual origins were in the Planning Commission,” says Pratap Bhanu Mehta of the Centre for Policy Research, in a recent newspaper article about the Planning Commission. “Instead of taking the lead on how socially desirable objectives could be met, its entire approach was to act as a kind of fiscal police,” he adds.

Mehta’s point is that in a dynamic and rapidly changing country, the Commission is unable to show a certain kind of nimblefootedness that it needs to at a local level in order to be more effective. The biggest casualties of this inability are states (as well as cities and local governments) which are not given a say as to how they should navigate the fortunes of their own space which they know best. And instead of approaching the problem backwards, like beginning with ‘how do we end poverty?’, says Mehta, the Commission places focus on ‘poverty caps.’

There seem to be no dearth of controversies that underscore these points.

Some states like Bihar, for example, have objected to BPL (below poverty line) and caste census being carried out currently. The Nitish Kumar government's argument is that social and caste census does not give a correct picture of individual headcounts. An official of his government explained that the state found that the average family size as per the decadal census was six, while the family size as per the BPL census in Bihar was 3.98. Families, in essence, tend to split themselves to ensure they get more ration cards which is something that the Commission has blithely ignored.

Then, there was the row over FDI in the pharmaceutical industry. The government-appointed committee under the chairmanship of Commission member Arun Maira suggested 100 per cent FDI into the pharmaceutical sector under automatic route, but this was opposed by the Department of Industrial Policy and Promotion (DIPP) and the Health Ministry.

The Maira Committee suggested that mergers and acquisitions by MNCs in pharma sector be vetted by the Competition Commission of India (CCI). However, DIPP under the Commerce & Industry Ministry and the Health Ministry objected, said that CCI is a new body set up to monitor cartels, and is not competent to decide on the public health issues. Instead it prefered it if the Foreign Investment Promotion Board (FIPB) under the Finance Ministry approved such FDIs rather than CCI. Ultimately, the Maira Commitee’s recommendations were accepted by the government.

It is not as if the subject of change has never been discussed at the PC. Time and again, be it during the tenure of Madhu Dandvate, as deputy chairman of the Planning Commission, or even when current Prime Minister Manmohan Singh was deputy chairman in the middle 80s, there have been attempts to recalibrate things and redefine the PC’s role, but none have progressed beyond mere statements and discussions.

Which brings us to the all important next logical question: is the current Planning Commission equipped to bring about this change?

Arun Maira, Planning Commission member, was entrusted two years ago to mine the perspectives of eminent industrialists as to their thoughts on the Commission and the common thread he came away with was unequivocal and succinct: change was way overdue.

Maira lists three major reasons why this is so while inadvertently echoing some of Pratap Bhanu Mehta’s critiques. Firstly, India is a less cohesive political entity with no single political party ruling across the country, as it was when the Commission was set up in the 1950s.The growth of coalition governments and regional parties in the last 20 years has decentralised the political structure and therefore there is now need for more devolution of planning to state and local levels.

Secondly, in the last 15-20 years, the role of the private sector in economic development has grown so much so that government actions can no longer have the same direct impact on economic growth as they used to have in the late 1950 and 1960s.

Thirdly, India is more dynamically connected with the outside world than it was during the early years after Independence, so now planning must be more flexible and deal more with uncertainties.

But does that mean that we should stop planning? “Never”, says Maira. All the eminent persons Maira met said that the fragmentation of the polity, the larger number of independent actors, and the uncertainty in the environment calls for a higher order of planning, not merely allocations of money.

Maira says the change has to start from within the Commission. “The Planning Commission should play the role of a systems reforms commission and not just get into allocations and controlling,” Maira said.

What is needed is to analyse not only the economic benefit of plans and schemes, but also to understand the social benefits of the same. “Today, everyone is asking don’t just give me numbers of expenditures, tell me what has been the social impact of the same,” says Maira.

He says Planning Commission should not write economic plans and then expect people to be inspired by them. “What is needed today is the ability to persuade people to accept reforms,” Maira says.

The recent report of C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council (PMEAC), advocated doing away with the distinction between plan and non-plan expenditure, which many say will reduce the role of the Commission to just an advisory body.

On the face of it, this may appear to have curbed the Commission’s powers. Yet, Rangarajan says that report is meant to grant more of it to the Commission rather than clip its wings. “In fact, the report suggests that the Commission will have a say both in planned and non-planned expenditure and not just Planned expenditure,” says Rangarajan.

In a recent article, Maira says that almost all of the widespread criticisms—including those mentioned by Pratap Bhanu Mehta—have been addressed in the 12th Plan Approach paper. This includes in providing ‘location-specific solutions,’ ‘flexi-funds’ and funds to tribal blocks, for instance, to enhance local capacity building measures. If the Commission manages to do all of this, perhaps it stands a chance of being as influential as it once was in the early decades following independence.