New entity will bring long-term perspectives missing in operating ministries
With the announcement of the demise of the Planning Commission by the Prime Minister, many obituaries of the Commission are being written. However, it is worth remembering that the East Asian superstars of development all had planning as a key part of their development programme. South Korea had a powerful Economic Planning Board (EPB) which guided development programmes in three decades since 1962. China has had a continuum of plans with the XII Five Year Plan going up to 2015. India too simply cannot achieve its development objectives without some sort of planning.
It should be clearly understood that a pure market economy is inconsistent with BJP’s much admired vision: Sabka Vikas, Sabke Sath. It is also inconsistent with the Prime Minister’s call in his Independence Day speech to rise above “me-ism”. Votaries of pure market economy emphasize, as the father of modern market economics Adam Smith did, that markets ensure that individuals taking care of their own interests lead to social good. In that philosophy, there is no need to think of the country or of its development or of the welfare of all. But markets by themselves will not ensure Swachha Bharat or shauchalaya for women in rural areas. In general, ‘development’ is not market’s business just as business may not be government’s business. If we want development, we need the government’s help and that needs planning of some sort or other. The only question is what the new avatar of planning will look like. Let me suggest some features of that new avatar.
Suggested name
Let us begin with the name. I suggest National Development Commission (NDC), which, while simple, includes all development-related activities such as policy reforms, investment programmes, regulations, social marketing, consensus-building and the like. The alternative that is being bandied about (‘National Development and Reforms Commission’) makes an unnatural distinction between development and reforms. Development is the objective; reforms are but one instrument.
Let us begin with the name. I suggest National Development Commission (NDC), which, while simple, includes all development-related activities such as policy reforms, investment programmes, regulations, social marketing, consensus-building and the like. The alternative that is being bandied about (‘National Development and Reforms Commission’) makes an unnatural distinction between development and reforms. Development is the objective; reforms are but one instrument.
Blueprint
The objective of NDC will be to prepare blueprints, help design action programmes, and monitor and evaluate outcomes to achieve the goal of “Sabka Vikas, Sabke Sath”. NDC will define what ‘Vikas’ will mean for India of the 21st Century. One possible definition could be that India would become a high-income country by 2050 when it celebrates the centenary of the Republic. But prosperity will be not just in economic dimension but also social, cultural and spiritual dimensions. In short, the goal will be that India, with the largest number of people in the world in 2050, will also be number one country in the world.
The objective of NDC will be to prepare blueprints, help design action programmes, and monitor and evaluate outcomes to achieve the goal of “Sabka Vikas, Sabke Sath”. NDC will define what ‘Vikas’ will mean for India of the 21st Century. One possible definition could be that India would become a high-income country by 2050 when it celebrates the centenary of the Republic. But prosperity will be not just in economic dimension but also social, cultural and spiritual dimensions. In short, the goal will be that India, with the largest number of people in the world in 2050, will also be number one country in the world.
In preparing the blueprint for India as No.1, NDC will bring long-term perspectives which are generally missing in operating ministries fighting day-to-day battles. Such long-term perspectives are important because in many areas (such as human capital formation) gestation lag is long. Similarly, in many areas (such as infrastructure) what we do today will bind us for the next 40-50 years. Climate change issues will become serious over a long period but mitigation and adaptation measures have to start now. If we wait for the consequences of climate change to become evident, it will be too late. The second area where NDC will contribute is to take fully into account the connectivity between sectoral programmes. It is well-known that different operating ministries operate as silos (and even jagirs as the Prime Minister mentioned in his Independence Day speech) while in real life their operations are connected. For highlighting these links and achieve “optimum utilisation of resources” a central economic agency is needed.
Co-ordination
NDC will be the agency to co-ordinate policy issues where different ministries are working with their own imperatives and mindsets. Energy policy, transport policy, urbanisation policy, water policy, land policy all require inter-ministerial co-ordination which only a central agency such as NDC can provide. In addition to preparing national long-term blueprint, NDC will help each State and Union Territory to prepare its own long-term blueprints. The task will be managed by States and UTs but NDC will provide financial and intellectual support as needed.
NDC will be the agency to co-ordinate policy issues where different ministries are working with their own imperatives and mindsets. Energy policy, transport policy, urbanisation policy, water policy, land policy all require inter-ministerial co-ordination which only a central agency such as NDC can provide. In addition to preparing national long-term blueprint, NDC will help each State and Union Territory to prepare its own long-term blueprints. The task will be managed by States and UTs but NDC will provide financial and intellectual support as needed.
By producing blueprints on which there can be a national consensus, NDC will help in making development a mass movement similar to what was done at the time of freedom struggle. All individuals at different levels will understand what the nation is trying to achieve and how it is in the interest of all and requires support of all. This will help in ensuring that steps of 1.25 billion people are in the same direction and not cancelling each other’s efforts. In the light of nationally agreed long-term blueprints, operating ministries will prepare detailed annual action programmes/budgets in consultation with the Ministry of Finance and with right to comment by NDC. The Prime Minister’s Office (PMO) will decide in cases of conflicting views.
Allocation of resources
The allocation of financial resources between States and the Centre will be the function of the Finance Commission. However, there would be many central projects (for example, in Railways, Ports, Shipping, Education and Health) where the allocation of resources by the Centre will have an obvious spatial pattern and thus impinge on States’ development. For these expenditure by the Centre, NDC will be a forum for ensuring inter-State balance with full participation of the States.
The allocation of financial resources between States and the Centre will be the function of the Finance Commission. However, there would be many central projects (for example, in Railways, Ports, Shipping, Education and Health) where the allocation of resources by the Centre will have an obvious spatial pattern and thus impinge on States’ development. For these expenditure by the Centre, NDC will be a forum for ensuring inter-State balance with full participation of the States.
Monitoring and evaluation of the programmes will be an important function of NDC. This will focus not on auditing functions but on effectiveness and efficiency of the operations in achieving the objectives. NDC will report to PMO for follow-up and necessary actions.
NDC will also prepare the Annual Economic Survey which is now done by the Ministry of Finance. NDC will be in a more objective position to monitor annual outcomes of all ministries, including the Ministry of Finance and submit its report to the PMO and Parliament.
It is desirable that NDC reflects the views of all partners in development, people, private sector, public sector and workers. In choosing the members of NDC, the Prime Minister will select persons with domain knowledge of the various segments of the economy and society but not beholden to these segments. Creativity and readiness to think ‘out of the box’ will be an important criterion in selecting the members of the NDC With these characteristics, NDC will be an important agency for India’s Vikas in the new avatar of planning.
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