Limited success

Print edition : September 19, 2014

C. Subramaniam, Finance Minister of Madras State, discussing the agrarian resolution with Prime Minister Jawaharlal Nehru at the Subjects Committee of the Congress in New Delhi on January 9, 1959. Photo: THE HINDU archives

The Second Five-Year Plan visualised the expansion of social service schemes. This file picture shows an embroidery and sewing class under way at the Social Welfare Centre in Salem, Tamil Nadu. Photo: THE HINDU ARCHIVES

The Planning Commission, which has addressed socio-economic deprivation fairly well, has not succeeded fully in ensuring the implementation of the Five-Year Plans. But then it never had the power to take uncooperative governments to task.

THAT since the 1990s India had moved away from welfarism to embrace free-market capitalism was evident from the action of its highest institution of social and economic planning, the Planning Commission. Contrary to the purpose for which it was instituted, the Commission, and its experts, instead of guiding the Union government in socio-economic matters and devising sustainable long-term plans, ended up reiterating the government’s advocacy of liberalisation, privatisation and globalisation (LPG). As a consequence, the institution suffered a loss of credibility as an independent intellectual body. Hence, when Prime Minister Narendra Modi announced on August 15 that the government planned to wrap up the Planning Commission and replace it with a new institution, it sounded like the most logical step, something that was waiting to happen.

The National Democratic Alliance (NDA) government sees, as did a dominant section in the previous United Progressive Alliance (UPA) government, the Commission as a redundant body incapable of original thinking. This opinion gained ground as most infrastructure development in the past two decades came from private investment.

Many political parties and civil society groups view the government’s decision to wind up the body as a blatant espousal of free-market capitalism in which the Indian state is setting aside the last vestige of welfarism. Many economists feel the government is closing the last channel between the people and the state through which socio-economic injustices and deprivation could be addressed.

This argument is justified by the fact that despite several limitations, the Planning Commission has remained the only body that has consistently recommended, through the Five-Year Plans, increased public expenditure to address socio-economic inequalities and supported welfare programmes such as the National Rural Health Mission (NRHM), the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the Right to Education. It is all the more laudable that its recommendations came at a time when the economic climate in the country was overwhelmingly neoliberal, which favours zero public expenditure. The fear that socio-economic problems will not find a vocal supporter in the new dispensation was validated by a note presented to the Union Cabinet by Planning Secretary Sindhushree Khullar. Giving an outline of the identity, structure and role of the institution that would replace the Planning Commission, the note, prepared on the basis of a directive from the Prime Minister’s Office, limited the functions of the body to areas such as infrastructure, mining, public-private partnership projects and targeted implementation of the government’s flagship schemes. It does, however, mention that the new institution will have managerial experts from the social sector to implement the government’s flagship schemes in an effective manner.

This is a significant departure from the functions of the Planning Commission as envisaged in the Nehruvian era. The hallowed institution was also responsible for devising strategies to bridge income inequalities and address the problems of socially vulnerable groups such as Dalits, Adivasis, women and the disabled. With the closure of the Planning Commission, much of the responsibility of addressing social and economic deprivation will rest on the respective Ministries.

A significant section of the intellectual class has been highlighting the merits of Five-Year Plans, which have been dismissed by the NDA government as Soviet-era hangover. It is, therefore, imperative to understand how the Plans sought to address the concerns of the majority of the Indian population.

The First Five-Year Plan allocated 16.64 per cent of the total Plan outlay for social services. In what was then considered the government’s priority, 5 per cent of the Plan outlay was allocated to land reforms. Along with this, the Plan resolved to strengthen higher education to complement economic growth by setting up the University Grants Commission (UGC) and five Indian Institutes of Technology (IITs).

The Second Plan, mostly known as the Mahalonobis Model, focussed on large industries but set aside a significant amount, Rs.4,800 crore, for the social sector. On the recommendations of the Third Plan, the Green Revolution was launched, which transformed the agrarian scene in many parts of India. The Plan sought to strengthen panchayati raj institutions through democratic decentralisation. Panchayat elections were started to democratise rural areas. Another important development during this Plan was the establishment of primary and higher secondary schools in many areas.

The Fourth Plan, in what is still seen as the most radical step to bridge income inequalities, recommended the nationalisation of banks. The four Five-Year Plans gave primacy to empowerment of the people through education. Most of the state-sponsored education structures visible today are the creation of the Plan programmes.

20-Point Programme

Praveen Jha, an economist at the New-Delhi-based Jawaharlal Nehru University (JNU), said: “By all accounts, the first four Plans provoked intense debates and considerable discussion—within academic, political and executive organs and also the public—on themes relating to India’s strategy of socio-economic transformation as well as on details of its economic policy.” The Fifth Plan (1974-79) was a period of high political turmoil as the government at the Centre imposed the Emergency. However, in order to retain political legitimacy, the Fifth Plan laid stress on income inequalities, which was made more visible by Prime Minister Indira Gandhi’s 20-Point Programme. “The Fifth Plan was transformative in nature, at least in the realm of ideas. It focussed primarily on employment generation, poverty and social justice,” said Paul Divakar of the Dalit Arthik Adhikar Andolan. It was during this Plan period that the Planning Commission recommended greater participation of the marginalised communities in the economic development of the country.

As part of this vision, two transformative plans—the special component plan (SCP) and the tribal sub-plan (TSP)—were implemented. The SCP requires the Centre and the State governments to allocate budget funds for Dalits in proportion to their number in the population so as to enhance the flow of development benefits to them. Similarly, the TSP mandates the governments to earmark for the Scheduled Tribes (S.Ts) 8.2 per cent of the total Plan outlay. It was from the Seventh Plan onwards that the focus of the government shifted to the model of private investment for economic growth.

This shift was concretised during the Eighth Plan when P.V. Narasimha Rao was the Prime Minister and the Chairman of the Planning Commission. This was also the time when India adopted economic reforms. In all subsequent plans, until 2002, the state’s concern for the socially and economically deprived population took a back seat. The Planning Commission relied mostly on non-governmental organisations (NGOs) and other private entities to reform the task of socio-economic empowerment. The concerns of these marginalised groups were articulated in Plan reports only superficially. However, the Eleventh Plan (2007-2012), despite adopting the neoliberal path, devoted a significant section to the social sector.

The institution, for the first time, introduced the term “inclusive growth”, a term that has gained wide usage. Blatant lberalisation and privatisation for more than a decade did not yield the kind of results the government had promised the people. Income inequalities widened and social injustices grew leading to widespread protests. People were not ready to buy the “trickle down” theory (that tax breaks or other economic benefits to the rich will trickle down to the poor) of neoliberalism. The Planning Commission was the only body to acknowledge this effect of economic reforms, though only in a cursory way. The Eleventh Plan was reflective of this sentiment, despite being overtly driven by LPG policies.

“India’s Eleventh [2007-2011/12] and Twelfth Five-Year Plans [2012/13-2017/18] have emerged as being distinct from the earlier Five-Year Plans insofar as these Plans had the goal of inclusiveness at the core of the growth strategy. The main features of the inclusive growth approach under the XI and XII Plans are the following: First, while faster growth is the main goal, the growth of GDP is not treated as an end in itself, but only as a means to an end. Therefore, it focusses on outcomes of increased income, and to realise the desired outcomes, it identifies a particular ‘type of growth process’ rather than emphasising on growth alone for inclusive outcomes. Second, the Plans recognise that the end outcome of growth is reduction in poverty and creation of employment opportunities, improving access to essential services in health, skill and education and other amenities. The third feature is the group focus, which means that pro-poorness would essentially involve outcomes that yield broad-based benefits and ensure equality of opportunity for all, especially the poor, and the poorest among them like the Scheduled Castes [S.Cs], Scheduled Tribes [S.Ts], other backward castes, minorities and women,” economists Sukhdeo Thorat and Amaresh Dubey write in a paper that reviews of the Eleventh and Twelfth Plans.

Despite having a fair record in addressing socio-economic deprivation, the Planning Commission performed poorly in ensuring the implementation of the Five-Year Plans. This was mainly for two reasons. First, it remained a toothless organisation without any power to hold the government accountable.

“There is a huge gap between what is visualised in the Plan and its actual implementation. And that is reflected in the difference between Budget Expenditure and Revised Expenditure every year. Every year, Revenue Expenditure is much lower than Budget Expenditure. The Planning Commission could not check this huge anomaly. It did not bother to institute a committee to check the excesses of the Union Finance Ministry. For instance, under-allocation of funds to SCP/TSP has almost become a norm with all governments. But the Planning Commission does not have the power to hold the Ministries accountable,” said Divakar.

Secondly, the thrust of planning in India has always been driven by economic growth. “Undoubtedly, in a country like India, Central planning is needed. But throughout the Planning Commission’s tenure, the idea of planning at the macro-level was flawed. Economic planning was given undue advantage over social sector planning, which is equally important. However, one can say that the Commission did make some effort in social sector planning in the recent Plans by advocating gender budgeting, the NRHM and the MGNREGS, among other programmes. One of the few important ideas that it articulated was doing away with the inhuman practice of manual scavenging,” Amitabh Behar, executive director of the National Foundation of India, said.

The Planning Commission and its role have elicited mixed responses. In this debate, however, it cannot be denied that the Commission’s decline as an institution for planning is directly linked to the successive Union government’s shift towards neoliberalism. In the past two decades, when private think tanks were demanding a curb on public expenditure by the Indian state, the Planning Commission, at least on paper, tried to find a balance.

Subrat Das, Executive Director of Centre for Budget and Governance Accountability (CBGA), said: “I think the Planning Commission remains the only institution to think of policy within the realm of public expenditure. Firstly, it addressed the concerns of minorities through plans such as women’s component plan, which progressed to become gender budgeting. It also mooted the idea of a 15-point programme for minorities. Secondly, through various committees, it did try to push the government to implement social schemes.

For instance, the Narendra Jadhav Committee was instituted to implement the SCP/TSP, but the government showed no interest. Thirdly, it instituted many committees for substantive restricting of Centrally sponsored schemes. The B.K. Chaturvedi Committee recommended that 20 per cent of the total Plan outlay be given to the States. But the Ministries agreed to only 10 per cent. I agree that the Planning Commission does not have an unblemished record, but uncooperative Central governments have had a bigger hand in the institution’s failures.”

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