Issues for Approach to the 12th Five Year Plan
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These are the interesting times for Planning Commission. This must be one of the most eagerly awaited moments in the Indian contemporary history as we witness the reports of Full Planning Commission Meeting on 21 April 2011. The Process of Formulating the 12th Plan have been accomodative, reflective on the wishes of the civil society. Even though there are issues about in what sense the term Civil Society has been interpreted. This initiative is significant in terms of very authentic questioning the existence of Planning Commission as extra-constitutional body is gaining ground by each passing day. Bibek Debroy in recent article in India Today says:
"India's bedrock is the Constitution. Anything not in the Constitution
should be abolished. The Planning Commission (PC) is an extra-
Constitutional body. It was set up through executive order in 1950. It has
no business to exist.
should be abolished. The Planning Commission (PC) is an extra-
Constitutional body. It was set up through executive order in 1950. It has
no business to exist.
Second, under the Constitution, public expenditure is scrutinized and
approved by Parliament. As an extra-Constitutional body, PC is not
answerable to Parliament.
approved by Parliament. As an extra-Constitutional body, PC is not
answerable to Parliament.
Third, fund-flows to states take place through Finance Commission, PC
and Central sector and Centrally-sponsored schemes CSS). We have
diluted Finance Commission mandates since late-1960s and early-
1970s. Union Finance Commission is the mandated Constitutional body
for Centre-state transfers and state Finance Commissions for
intra-state transfers. If Finance Commission's original mandate is
restored, we won't need fund-flows to states through PC. Discretionary
transfers to states haven't incentivised reforms in states. Annual Plan
discussions are a nuisance. In an era of reforms, we need more
transparency and less discretion. See how backward regions' grant-fund
has been mis-utilised and special category status for states abused.
This is an era of decentralization. No one knows the number of Central
sector schemes and css. They have proliferated since late-1960s. At one
point, the number was 455. It was pruned to 150, but have proliferated
again. We were perfectly happy when they didn't exist, before 1960s.
They impose Centralized templates from above, regardless of local
conditions. This year's Budget also recognizes the Plan/non-Plan
distinction as artificial. Even if this distinction goes, as it should, and we
eliminate CSS, there is no need for PC.
and Central sector and Centrally-sponsored schemes CSS). We have
diluted Finance Commission mandates since late-1960s and early-
1970s. Union Finance Commission is the mandated Constitutional body
for Centre-state transfers and state Finance Commissions for
intra-state transfers. If Finance Commission's original mandate is
restored, we won't need fund-flows to states through PC. Discretionary
transfers to states haven't incentivised reforms in states. Annual Plan
discussions are a nuisance. In an era of reforms, we need more
transparency and less discretion. See how backward regions' grant-fund
has been mis-utilised and special category status for states abused.
This is an era of decentralization. No one knows the number of Central
sector schemes and css. They have proliferated since late-1960s. At one
point, the number was 455. It was pruned to 150, but have proliferated
again. We were perfectly happy when they didn't exist, before 1960s.
They impose Centralized templates from above, regardless of local
conditions. This year's Budget also recognizes the Plan/non-Plan
distinction as artificial. Even if this distinction goes, as it should, and we
eliminate CSS, there is no need for PC.
Fourth, PC has been unable to push decentralized planning. In terms of
mindsets, it makes things worse by its unwillingness to do so, as if all
wisdom is vested from above. Witness the confusion it has created over
poverty numbers. BPL should be determined through decentralized and
participatory identification by gram sabhas and urban local bodies. Why
should pc muddy waters?
mindsets, it makes things worse by its unwillingness to do so, as if all
wisdom is vested from above. Witness the confusion it has created over
poverty numbers. BPL should be determined through decentralized and
participatory identification by gram sabhas and urban local bodies. Why
should pc muddy waters?
Fifth, there are plenty of research bodies outside the Government that
can do research now and produce data. PCs utility inthese is
questionable.
can do research now and produce data. PCs utility inthese is
questionable.
Sixth, it has no imagination. It continues to produce Plan documents
and approach papers that are rehashes of First Five YearPlan. There
was a time when there used to be models for growth emanating from
PC. That was because PC had the task of directing resource flows. In
this era of reforms, no one can direct resource allocation. It is
determined by markets, with a role for the private sector. Several
regulators and ministries outside PC have been empowered. What role
can PC have now? Its projections go wrong. Had this occurred outside
the government, PC would have been wound up long ago. PC was
supposed to subject itself to a zero-based budgeting (ZBB) exercise,
reinventing itself and justifying its existence. But nothing has moved.
All that happens is PC triggers squabbles with other ministries,
departments and states, often in public.
and approach papers that are rehashes of First Five YearPlan. There
was a time when there used to be models for growth emanating from
PC. That was because PC had the task of directing resource flows. In
this era of reforms, no one can direct resource allocation. It is
determined by markets, with a role for the private sector. Several
regulators and ministries outside PC have been empowered. What role
can PC have now? Its projections go wrong. Had this occurred outside
the government, PC would have been wound up long ago. PC was
supposed to subject itself to a zero-based budgeting (ZBB) exercise,
reinventing itself and justifying its existence. But nothing has moved.
All that happens is PC triggers squabbles with other ministries,
departments and states, often in public.
Seventh, it is a parking spot for retired bureaucrats and failed
politicians. The intention is not to tap their expertise. They are parked
there because they will create the least nuisance there. In addition,
positive affirmation and reservation quotas characterize membership.
This is true of other commissions too. But what's true of other
commissions is also true of this. It should be distinguished through an
act of omission."
Keeping in mind all the questions raised above, let us take a look at the outcomes of recent Planning Commission meeting chaired by Hon. Prime Minister.
" Eleventh Plan Experience
• GDP growth likely to average 8.2% over 11th Plan: short of the 9%
target, but remarkable given the global crisis and drought
• In the 10th Plan GDP growth averaged 7.7 %
• We have also seen progress on inclusiveness: Agricultural growth,
Poverty Reduction, Education, Health, Upliftment of SCs/STs,
Minorities etc.
• However progress on inclusiveness less than expected. We are likely
to miss Millennium Development Goals (MDG), except perhaps on
poverty
• Inflation has accelerated in the last two years
• Current international environment is very uncertain
Global pressure on food, oil and other commodity prices
Financial conditions & exchange rates are likely to be volatile due
to sovereign debt related problems in Europe/US, and readjustment
of extra-ordinary monetary/fiscal easing
About consultations
" We have commenced a very wide consultative process on the
challenges for the 12th Plan
• Over 900 CSOs across the country have participated, as well as many
industry associations and ‘think tanks’
• Internet being used for first time to reach out to broader community
including several hundred sectoral experts
• Planning Commission has launched a dedicated website
http://12thplan.gov.in This site is also linked to Facebook. 32,000
netizens have visited these two sites and have left many insightful
comments
• A series of regional consultations with States are planned in May
• Dialogue with other stakeholders continues."
Key Messages from Consultations
• Strong demand from all sectors of society to improve Implementation,
Accountability and Service Delivery
• Citizens Groups broadly support the stated objectives of existing
government programmes. However, the design and institutional
arrangements are weak. Greater devolution and empowerment needed
• Government programmes need a new architecture: greater
localisation, break-down of silos, feedback from citizens, and
mechanisms for learning and sharing of best practices
• A major contribution to economic growth now comes from the private
sector. A policy environment that supports this dynamism is therefore
important
• Create environment for nurturing enterprise, improving markets,
supporting innovation, providing access to finance and inculcating
respect for common pool resources
Twelfth Plan Objectives
• Basic objective : Faster, More Inclusive, and Sustainable Growth
• Is 10% growth feasible? Realistically, even 9% will need strong
policy action. Could aim at 9.0 to 9.5 percent
• Energy, Water and Environment present major sectoral challenges. Can
we address them without sacrificing growth?
• Can we find resources to create a world class infrastructure?
• For growth to be more inclusive we need:
Better performance in agriculture
Faster creation of jobs, especially in manufacturing
Stronger efforts at health, education and skill development
Improve effectiveness of programmes directly aimed at the poor
Special programmes for socially vulnerable groups
Special plans for disadvantaged/backward regions
Desirable changes
• Social Mobilisation: People should be active agents of change. Flagship
programmes need to provide human and financial resources for social
mobilisation, capacity building and information sharing
• Professionally managed delivery organisations are needed with clear
mandates and accountability. We need much better mechanisms for
convergence of government departments on systemic issues
• Devolution can be effective only if the autonomy of PRIs/ULBs is
increased and their human resource capabilities improved. How can the
Centre help?
• Mechanisms need to be created at all levels to understand the needs of
vulnerable sections of the society and inform policy-makers
• Diagnostics of Failure and Mainstreaming of Success: horizontal linkages
need to be created for exchange of information and best practices
• Institutional mechanisms for conflict resolution, particularly for land and
water."
Planning Commission has identified 12 challenges for the 12th Plan.
These are:
Enhancing capacity for growth
Enhancing skills and faster generation of Employment
Environmental and ecological sustainability
Decentralization, Empowerment, and Information
Technology and innovation
Securing the energy future for India
Accelerated development of transport infrastructure
Rural Transformation and Sustained Growth of Agriculture
Managing Urbanization
Improved access to Quality Education
Better preventive and curative healthcare
Economic Turbo Chargers
The list of challenges will not end here but these are broad challenges identified. The elements of challenges must be discussed. Before taking break from this piece let us ponder over what Mihir Sharma from Indian Express said when he wrote a well timed OpEd. He said:
" Policy-making’s central problem: how the machinery of administration has obsolescence built-in, how it is creakingly failing to adapt to a new and more complex era. Our government is run by generalists. And there’s no chance of that changing any time soon. But now, each ministry and department, state or Central, is expected to try and frame policy with market-supporting, quick-reacting precision. Much blunter instruments — licences, restrictions, diktats of one sort or another — are out. The economy is an even denser tangle of
connections than the one that planners in the ’50s tried to reduce to a large matrix of inputs and outputs.
There’s a lot of talent in government. But everybody knows they can’t handle this transition alone. Nor should they, many would argue. Policy possibilities that aren’t culled from a broad base of experiences will be too limited. And if you have just tenured employees analysing alternatives, you build in bias towards rigidity and conservatism. We don’t need a statutory body wasting its time predicting how much steel we will need in five years. We do know what we need: an institution capable of providing genuinely independent, non-partisan ideas — yet ones that engage with the human and political aspects of the economy, rather than sterile accounting aspects of it.
The biggest barriers to increasing and deepening growth, and freedom, today are political. Advice that pretends they don’t exist has little value. Where would this advice come from? Our political parties don’t debate and develop policy ideas. We don’t have a culture of think-tanks, nor does one look like developing. Universities have other reform priorities. Journalists can’t do everything. No, government itself will need to nurture and grow independent — and persuasive — sources for policy prescriptions and recommendations.Nehru’s Planning Commission was supposed to help the state be the vanguard of the economy, to provide disinterested instructions to an activist government. Now, instead, a retreating government needs the Commission, or something very like it, to be the vanguard."
The biggest barriers to increasing and deepening growth, and freedom, today are political. Advice that pretends they don’t exist has little value. Where would this advice come from? Our political parties don’t debate and develop policy ideas. We don’t have a culture of think-tanks, nor does one look like developing. Universities have other reform priorities. Journalists can’t do everything. No, government itself will need to nurture and grow independent — and persuasive — sources for policy prescriptions and recommendations.Nehru’s Planning Commission was supposed to help the state be the vanguard of the economy, to provide disinterested instructions to an activist government. Now, instead, a retreating government needs the Commission, or something very like it, to be the vanguard."
I think, possibilities of confusion have now evaporated.
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