A reform wish list

NITI Aayog's agenda is full of good ideas only

The National Institution for Transforming India, or NITI Aayog, was envisioned as a replacement for the erstwhile Planning Commission. Its foundation was meant to be a concrete statement of India’s emergence from the age of planning, a phenomenon underlined by the abandonment of the old Plan/non-Plan distinction in government expenditure starting with this year’s Budget. However, given that the last Five-Year Plan has come to an end, there was a need for an overall policy document that provided comprehensive guidance to various ministries and departments at the Centre, and so the NITI Aayog has published a “three-year Action Agenda”. The Aayog says that this should be read together with a seven-year strategy and a 15-year vision document, both of which are yet to be released.

The agenda differs from the five-year plans in several ways — some of them promising, but not all of them an improvement. Since the liberalisation of the economy in 1991, five-year plans had altered from being directions to the private and public sectors to being guidelines for expenditure, and a collection of targets for different sectors. As such, they were a storehouse of data, and a method by which a government could be held to account. From this point of view, the Action Agenda is an imperfect replacement. In many sections – for example, the chapter on rural development – the agenda is little more than a wish list of policy reform. These sections would only be taken seriously if there was a sense that they were a collation of executive and legislative actions under way that would be completed in the next three years. However, this does not appear to be the case.

Other sections are more rewarding. The section on urban development, for example, does at least provide a set of yearly targets for housing schemes and other government activities. The section dealing with Indian Railways sets clear goals to be accomplished by 2019 or 2020, such as doubling the speed of freight trains and completing the implementation of the two dedicated freight corridors. However, there is no clear sense of the resources that will be needed for such endeavours. What would be useful is if these individual goals were costed and linked up with the overall funds proposed for these sectors in the agenda’s initial section, which lays out a medium-term fiscal framework.

The section on the fiscal framework is perhaps the most noteworthy. Among other things, it lays out the NITI Aayog’s estimate of future revenue growth – depending on three different scenarios of growth in gross value added – and seeks to propose a demarcation of expenditure. There is a striking increase proposed, for example, in health spending, from Rs 30,000 crore in 2015-16 to Rs 1 lakh crore in 2019-20, or a doubling of allocation as a percentage of the gross domestic product (GDP). Railway capital expenditure is proposed to be increased from Rs 40,000 crore to Rs 1.18 lakh crore, or from 2.3 per cent of the GDP to 4.3 per cent of the GDP. The question is whether these targets are acceptable to the finance ministry. If the NITI Aayog is to assume authority and future action agendas are to acquire credibility that this one lacks, the finance ministry will have to follow these recommendations closely.