Shift to market

The changing stances of the Planning Commission reflect the influence of the political climate.

THE short note on the history of the Planning Commission on its website concludes thus: For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature.

Evidently, the institution of the Planning Commission itself perceives this as a parameter for the qualitative assessment of its functioning in general, including the thematic thrusts of Five Year Plans. An overview of the last two Five Year Plans the Tenth and the Eleventh and the Approach Paper of the Twelfth Plan on this basis throws up a number of indicative nuances in political and ideological terms. These nuances exemplify the general character of the prevalent political dispensation in the country and the socio-economic direction that it is following.

The nomenclature used by the three teams that constituted the Planning Commission in the period between 2002 to the present are also significant in terms of this broad analysis. The Tenth Plan document prefaced its delineation on perspective and strategy by asserting that the development process must be viewed in terms of the efficiency with which it uses an economy's productive capacities, involving both physical and human resource, to attain the desired economic and social ends, which is not just material attainment.

It added: To this end, it is absolutely essential to build up the economy's productive potential through high rates of growth, without which we cannot hope to provide expanding levels of consumption for the population. However, while this is a necessary condition, it is not sufficient in itself. It becomes imperative, therefore, to pursue a development strategy that builds on a policy focus for exploiting synergies between economic growth, desirable social attainments and growing opportunities for all. The co-relation between growth, expanding levels of consumption and attainment of economic and social ends that the Plan document sought to assert pointed towards a concept that hinged on gross domestic product (GDP)-led growth and its supposed trickle-down effects.

The Tenth Planning Commission drew substantially from Vision 2020, a document, that was released in December 2002 under the auspices of K.C. Pant, then Deputy Chairman of the Planning Commission. Pant said that Vision 2020 had examined many important issues but the ones that stand out most powerfully are employment and education.

In order to ensure access to food and other essentials of a healthy life for all citizens, India faces the challenge of generating 200 million new employment opportunities over the next two decades. This report calls for raising employment generation to the top of the nation's development agenda and marshalling all available resources to create employment opportunities for all job-seekers. Thus, the broad thematic thrust of the Tenth Planning Commission, which worked under the Atal Bihari Vajpayee regime, was high growth, with a specific emphasis on employment and education. Apart from Pant himself, Planning Commission members such as the educationist Dr K. Venkatasubramanian, the senior bureaucrat N.K. Singh, and politicians such as Som Pal and Kamaluddin Ahamed contributed to the development of this thematic thrust.

The nomenclature used by the Eleventh Plan (2007-12) was Towards faster and more Inclusive Growth. The emphasis on inclusive growth led to an enhanced focus on spending in the social sector, especially in areas such as rural development, health and education. The Eleventh Plan, for the first time in the post-reforms period, had two volumes devoted to social-sector spending, even while asserting the need for economic growth. It highlighted the fact that social-sector spending by the government has been secondary in several previous Five Year Plans in the past few decades rather than being an internal constituent of the Plans, as in the Nehruvian models of planning. Consequently, for the first time after economic reforms were introduced in India, the Planning Commission prescribed 60 per cent allocation to the social sector alone, out of which 10 per cent was for health and 20 per cent was for education. The allocation to the social sector was four and a half times greater than in the Tenth Plan, and the members were of the view that the centralised plan in a market economy was unnecessary and hence started using terms such as allocation and gross budgetary support for its prescribed programmes.

The consequent visualisation and implementation of programmes sought to enhance employment levels in rural sectors, the assertion of rights of forest dwellers and tribal communities, and the opening up of governance practices and modalities for public scrutiny. All this marked a significant departure from earlier Plans. In many ways, it reflected a realisation that the thrust of the Ninth and the Tenth Plans, which relied primarily on GDP-led growth and its trickle-down effects, would not be effective in a country like India where more than one-third of the population lived below the poverty line (according to the official Tendulkar Committee estimates). Its thematic thrust underscored that planning could not be done on the basis of a singular agenda called growth but had to unify the principles of inclusion. The members of the Eleventh Planning Commission, including the development economist Abhijit Sen, the progressive bureaucrat B.N. Yugandhar, the social worker Sayeda Hameed and the political representative of the marginalised section Bhalchandra Mungekar, contributed significantly to this significant shift in emphasis. At the level of larger politics, the dependence of the then United Progressive Alliance (UPA) government on the Left parties for survival was also a factor in the formulation of this shift.

However, it is widely recognised that this process in the Eleventh Planning Commission discussions was marred by virulent debates. While members such as Yugandhar, Sen, Mungekar and Hameed insisted that the Plans needed to keep in mind social-sector spending, many other members, including ministerial representatives and Deputy Chairperson Montek Singh Ahluwalia, believed that GDP-led growth would lead to trickle-down benefits. Amid debates, the members tried to reach some balance between growth and inclusion. In terms of implementation, too, many of the stated objectives in terms of inclusion were virtually sabotaged through administrative procedures. According to Mungekar, a Planning Commission task force formed to monitor the implementation of the programmes found that 41 Ministries out of 65 were exempted from allocating funds under the special component plan meant for the Scheduled Castes. Thus, in spite of the different and inclusive qualitative thrust, the functioning of the Eleventh Plan was also marred by inconsistencies of governance.

The Twelfth Plan Approach Paper, which was made public recently, has been described as enabling faster, sustainable, and more inclusive growth. This nomenclature has been perceived by many observers as being suggestive of a compromise. Thematically, the Twelfth Plan Approach Paper makes the point that the market could be used to alleviate India's social problems.

The Approach Paper clearly reveals a contradiction between the objectives, namely, faster and more inclusive growth and the instruments put forward for achieving them, which are geared towards strengthening the market and its forces.

Many analysts are of the view that a detailed examination of the contents of the Approach Paper sets all doubts at rest on its pro-market orientation. When the Planning Commission was reconstituted after the change of government in 2004, cheerleaders of the reforms process were seized with apprehension. Will a high-profile commission revive their bete noire of centralised planning and act as an impediment to the liberalisation programme? The composition of the body an uneasy amalgam of known votaries of liberalisation and those whose concerns with the human face of reforms' were equally public knowledge lent an edge of suspense and uncertainty to this apprehension. The cheerleaders' fears have proved unfounded, with reforms very much on the commission's minds, said D.M. Nachane, a prominent economist and a senior professor at the Indira Gandhi Institute of Development Research, Mumbai, in one of his papers.

Talking to Frontline, Bhalchandra Mungekar, said: The thrust that we tried to give to social-sector spending in the Eleventh Plan is absent in the Twelfth Plan Approach Paper. In a market economy, the role of planning should be carefully formulated and cannot be exaggerated in any sense. It is, therefore, important for the Planning Commission to focus on the social sector.

The Twelfth Plan looks like going back to the theory of centrality of the market, Mungekar said, adding that inclusive growth could not be discussed as an abstract subject but had to be objectively stated and used for the empowerment of Dalits, Other Backward Classes, Muslims, and other very poor sections. This, he says, should be done through a gross budgetary support.

In many ways, the enhanced market orientation of the current Planning Commission is not surprising. As in the case of earlier teams in the Commission, this qualitative dimension is also inherent in the very constitution of the current team. Sen and Hameed, who were part of the Eleventh Planning Commission, are present in the current team too, but it also has members such as Dr Narendra Yadav and Arun Maira, whose varied careers have seen them working as advisers to clients across a wide variety of administrative, financial, industrial and commercial disciplines in many countries and also institutions such as the International Monetary Fund (IMF). The larger political climate in the country, where the second innings of Manmohan Singh's government does not have the limitations and controls imposed by a dependence on the Left parties for survival, must also have contributed to the new thrust.