Yojana Bhavan To Let?

Once again the ritual motions of a serious discussion on the size of the next plan between the Planning Commission and the finance ministry are being gone through. This is a charade enacted on the eve of every plan with the final size perfunctorily determined less on economic logic than on grounds of political tolerance. The final figure for the record is somewhere between the extravagant projections of the Planning Commission and the finance ministrys estimates of likely surpluses available for plan spending. Since even the latter estimates have been repeatedly

falsified, the shadow boxing is even more unreal.

This old face-off between the two arms of the government is made worse this time by total political incoherence at the top. The Common Minimum Programme is a thing of shreds and patches, tattered even further by daily public wrangles among the constituents of the United Front, who are interpreting in opposite ways the minimalist consensus ambiguously written into the programme. In such a situation, what kind of coherent planning is possible.

 

That apart, with a much larger space for economic activity so far financed for the most part by the exchequer, now involuntarily assigned to the private sector, the allocative role of the Planning Commission has been diminished even further.

Even in better times when planning was taken seriously, at least by the government of the day, these allocative exercises became meaningless even before the ink was dry on the pages of the document. That was because, the algebra and the arithmetic on which these investment allocations and output estimates were determined were operating in a vacuum with little relation to the facts on the ground. The exercise begins with pre-determined normative growth targets, which in 45 years of planning have never been hit. Sectoral allocations are then fitted into this growth assumption. Output estimates are again made on extravagant premises of capital output ratios that have hardly ever been realised. Above all, with the investment arithmetic routinely based on the prices of a base year and with nothing but platitudes provided to take note of the runaway inflation that has been the experience of every plan except the first, investment in real terms has been consistently less than planned. This shortfall, compounded further by delays and inefficiency in implementation, has regularly thrown into disarray every expectation of output, and consequently, of growth.

All this is a dismally familiar story and has progressively devalued the Planning Commission, though it was considered bad form to say so. In the heydays of socialism, public discourse was fitted into a format in which criticism of even the methodology of the planning exercise and the manifestly unreal premises on which it was based was considered ideological treason. But there is no such thing as socialist econometry.

Even under socialist planning indeed more so under it one should get ones figures and assumptions right. If no realistic provision for inflation is built into the estimates, if no regard is had to the levels of efficiency in the use of capital and manpower, disillusionment with the results and disrepute of the planning process are inevitable.

However, though one can fault the Planning Commission for the make believe arithmetic of its documents, it cannot be wholly held responsible for the performance of the economy. Economic (and social) prescription rather than management has always been its role. For all the figures it keeps on playing around with on paper, its control over the fisc is non-existent. It has no participatory or even a supervisory role in implementation. Its appraisals of performance are hardly ever taken seriously. The administrations contempt for such exercises was vividly demonstrated when the Rao government had the hardihood to tell it to rewrite its mid-term appraisal, because it did not like what was said in the document. Eventually, even the rewritten document was dumped without discussion.

The fact is those who actually manage or mismanage the economy have little use and less patience with the Commission. Their immediate problems are overwhelming and day to day coping leaves little time for long-term perspectives. For years now, the Union Budget makers have not been able to manage a surplus even on revenue account. Traditional housekeeping spending has had to be met from capital receipts, largely by borrowing at higher and higher interest rates, which add to the revenue deficit already bloated by politically unavoidable giveaways and ever growing administrative expenditure. In such a bind, the first thing to be axed is the plan projects. And with the recent changes, acknowledged and unacknowledged, in the governments economic philosophy, the Indian economy has increasingly become independent of the Commissions predictions and prescriptions. And much of the economic growth that has taken place has been in areas in which its direct involvement, prescriptively or otherwise, has been minimal.

It is therefore time that serious thought is given to redefining the role of the Planning Commission and its tasks. This will free it from its current illusory status of a master planner of economic growth, endowed with the necessary command over resources for deployment along desirable lines and determining incremental investment and output targets of particular sectors. Dr Arjun Sengupta, himself a member of the Commission, is reported to have produced an alternative draft of the next plan, full details of which are not available. But what of it has appeared in the press suggests that he favours, rightly, a shift away from obsession with size and numbers, which, as argued above, are extremely shaky. He would much rather that the Commission concentrated on desirable policy regimes in a purely academic and advisory manner with inputs from the best economic and social thinking. While this will certainly end the make-believe exercises with pretensions to precision currently undertaken by the Commission, it would still leave unchanged the Commissions lack of binding authority in implementation.

Secondly, the Commission could apply its mind to the devising of institutional model programme structures for implementation on the ground. This would be a down to earth endeavour with no escape routes into fancy algebra. In this task it could well emulate the first Planning Commission when T T Krishnamachari was a member and put in position some of the agencies of development that have endured despite infirmities. It was part of the once fashionable socialist critique if the first Commission that it was not a Planning Commission at all, because it did not flaunt macroeconomic equations. But it did get on with what is now increasingly realised as the proper task of the Planning Commission. The kind of work done by this Commission, and subsequently, by the one under Dr Gadgil and the one during the Janata regime, with Dr Raj Krishna as its most creative member, could well be the assigned tasks of a redefined Planning Commission. With Madhu Dandavate at the helm, this transition should be easy.