Same Old Centralized Planning

B.Chandrasekaran*

 

Being a believer of principles of liberalism and for the perspective of the twenty-first century, it makes compelled to pen down few thoughts on India’s centralized planning process which has been in practice for more than six decades. Planning has been made ritualistic in practice and lately added a new fashion to it through consultation of various stakeholders. Does that new fashion change the basic question? To be sure, why do we need a centralized planning system when the State would never be in a position to possess the required information to plan for the people? This question is at least a century old one, yet time and again rises to reiterate that the rational way to make a sensible planning is decentralized one or make it as part of individual’s aspirations.

 

It would be pertinent to remember the Austrian Economist and Nobel Laureate Friedrich Hayek’s warning gave in 1944 that “the more the state ‘plans’ the more difficult planning becomes for the individual.”. Even much before that our own economist such as B R Ambedkar eloquently pointed out in 1917 that there “…must come a point at which the higher authority must be less competent than the lower, because it cannot by any possibility posses the requisite knowledge of all local conditions. It was therefore obvious that a Central Government for the whole of India could not be said to posses knowledge and experience of all various conditions prevailing in the different Provinces under it. It therefore, necessarily becomes an authority less competent to deal with matters of provincial administration than the Provisional Governments, the members of which could not be said to be markedly inferior, and must generally be equal in ability to those of the Central Government, while necessarily superior as a body in point of knowledge”. What Ambedkar propounded more than 96 years ago is true even today.

 

Despite these warnings when India become Republic in 1950 the first Prime Minister adopted the fogy idea of centralized planning by rejecting the criticisms of even the eminent statesman like C.Rajagopalachari. Nehru patronized the evil ideas of Professor Harold Laski who had a permanent Chair for sitting in the Constituent Assembly debate in Indian parliament.

 

Thus, the first decade of centralized planning achieved nowhere near to the objectives aimed at. Professor B R Shenoy perhaps the only one to write a Dissent Note to the Second Five Year Plan (1956-1961) for all its ill-conceived proposals approved by majority of fellow economists. Decade’s later development economist Peter Bauer wrote that “Shenoy rejected the general spirit of the Majority Report as endangering personal freedom and a democratic political system. He also disagreed with several major proposals, including the scale of money creation, the maintenance and extension of state economic controls, and the scope of nationalization” (Cato Journal, 1998).

 

In 1961, Professor Shenoy himself wrote that “Statist tampering with the market mechanism in the name of “planning” has brought on us the worst of both worlds—the evils of planning and the evils which the market mechanism produces when tampered with.”

 

 

Government of India’s eager practice of centralized planning in India resulted many block holes in the system: entry exist in business has been dictated with absolute power; the bureaucratic regime is imbibed with arbitrariness at all levels; decentralized approach has been marginalized to the large extent; and incentives and efficiencies notions are seen as threat to the State apparatus.

 

The Planning Commission of India is an official agency responsible for planning for more than a billion people. All through the Five Year Plans, it does not matter what information it possess for planning, it would make out its own big picture of relevant and context and get printed in the official records and keep referring it like a Gita for years. To change the muddled practices of the Planning Commission at least four attempts were made to reform the entire functions of the Planning Commission but nothing came out usefully. The last attempt was tried with the help of Mr Arun Maira who is a Member in the Commission in the UPA-2. He is known for his great contribution made in the world of business.

 

What is more interesting is that the Members of the Planning Commission now often claims that the present Five Year Plan (2012-2017) Document is different from what it was in the past. What they really mean is not in block and white.

 

The Planning Commission’s Member Mr. Maira is said to be the official in-charge for overseeing the New Approach for the 12th Plan. According to him “…the world has become much more dynamic because of interconnection, globalisation and speed. The Planning Commission would need to refurbish its tools, its processes to be able to foresee into a much more dynamic world, offer change and also change its ability to communicate with people.” (Governance Now, October 6, 2010). What Mr Maira says is great intention and perhaps noble idea but to effect changes in the official documents of 12th Plan is not all that easy to come by.

 

The Commission had completed the “Approach to 12th Five Year Plan (2012-17) Document” more than a year ago. From the beginning it was said that 12th Plan approach would be a NEW APPROACH and will NOT repeat the past practices. The so called NEW Approach, as they mean it is nothing but adding glamour to the Consultative Process to arrive at New Approach. Is anything different have been achieved? Bear with me, as usual all through the 139 page it is the same old approach yet in a new words worth for nothing. The real achievement, as some say, is the adding of 39 more pages to the NEW Approach Document compared to previous plan! Some even say it’s the 12th Approach to the same plan started some 60 plus years ago. That’s Approach Document.

 

For the 12th Plan detail Document, information were gathered through the glamour of consultations with various stakeholders in the country including State Governments, non-governmental organizations of various types, industry chambers, academic community, citizens, farmer, youth, etc. regarding what people across spectrum think about what is relevant and important for the country and need to be focused in the next five years. Whatever may be the process of consultative new approach adopted, the ultimate machinery employed with newly collected information for shaping the detailed 12th Plan Document are invariably the same people who have closed mindset, narrow understanding and unable to align with the ground reality. Besides, the real issue is not just the people in the Commission who are to be blamed for the systemic maladies involved in planning but the very idea of institutionalization of the evil of impossibility i.e. centralized planning process which is deeply flawed conceptually.

 

It was even very funny, when the Hindi movie “Peepli Live” was screened in the Planning Commission, most of the officials said to be laughed for their foolishness. As news item reported in The Times of India (22-9-2010) an official saying “the movie is an eye-opener for many experts, who have never visited rural areas but have framed many development schemes”. It is pathetic that government elected by the people frames schemes for people without even knowing the situation in which they live.

 

Unrealistic or artificial plans are prepared and implemented for capitalization of political will and make poor people more dependent on the government. As rightly pointed out by economist Bibek Debroy “…what goes by the name of planning. Everyone agrees China is more decentralised than India and decentralisation is desirable. But we do little beyond paying this lip service, notwithstanding the 73rd and 74th Amendments to the Constitution. Think of the Planning Commission. Why does it exist? It no longer needs to be a government-funded think-tank and research body. There’s no market failure in such areas today. If plans are to be developed at district-level and aggregated upwards, we no longer need Mark XI or Mark XII of the First Five-Year Plan. If funds are increasingly transferred directly, we no longer need plans and Gadgil formulae and Central sector and Centrally sponsored schemes. Flows can, and should, be through the Finance Commission. That we don’t believe in decentralisation is evident from our use of the word “Centre”. Where does this come from? It isn’t one used in the Constitution. The Constitution only uses the word “Union”. That’s what India should be — a Union with a Seventh Schedule that is purged of the vestiges of centralisation. However, decentralisation doesn’t only mean so-called Centre-state issues. It also means decentralisation within states. No state voluntarily wishes to do that” (Indian Express, December 31, 2010).

 

Despite these facts, Mr Maira has been painting wrong picture continuously saying “…commission has lifted itself out of sectoral silos to prepare an Approach to these inter-linked objectives. It is looking at the big picture through ten cross-cutting lenses. These include the forces of citizens’ expectations, innovation and enterprises, demographics and skills and land and water stress.” (Indian Express, September 18, 2010).

 

The reality of internal functions of official system seems to be no different from past. This has been very well reflected in the 12th Plan Chapters approved by the National Development Council in its meeting held on December 27, 2012. Each Chapter has its own facts and figures of past, present and future except the world of people in this country. The Chapters like agriculture, employment and skill development, education and health do not display any urgency in addressing the very issues it poses in the beginning. In fact, these Chapters have been drafted flippantly. Since, the pundits in the Commission argue that they have consulted widely the civil society, etc. for formulating the 12th Plan Document. Is it not time now to examine the proposals of each Chapter in 12th Plan Document to gauge the public perceptions about what they have suggested to the Commission and what has actually printed in the Document?

 

*The author works in public policy in New Delhi. You can reach him at bc.sekaran@gmail.com

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