Suggestions for a new role for India’s Planning Commission #2

BFN did not focus on India’s Planning Commission, which was incidental to my overarching message of liberty. But I do have more thoughts on the Planning Commission. Some of these were clarified during the discussion yesterday at the Australia India Institute.

Key questions that need to be addressed include:

1) From where does the Planning Commission get its mandate? It is clearly not a constitutional body, nor is there any statutory act that establishes the Commission. Yes, there is a Planning Minister, but the Commission itself is is not accountable to anyone.  [Prof. Mattoo's question]

2) How are Planning Commission members selected? Where does their authority or mandate come from? [Prof. Mattoo's question]

3) Why is a body that has no constitutional authority allowed to intervene so significantly in policy making and allocation of funds? This makes it a hugely conflicted organisation. It is not good enough to say that the recommendations of the Planning Commission are not binding. What has happened is that the Cabinet accountability for policy has been over-ridden by this side-organisation which “binds” the hands of Ministers and prevents them from being held to account for policy failures. [Sanjeev's question]

4) Why is the Planning Commission so heavily populated by “senior” IAS officers? What qualifications or expertise do they have to develop policy? Where are their peer-reviewed policy publications that entitle them to “formulate” policy? [Sanjeev's question]

5) Why has no formal review been conducted of the Planning Commission by an independent systems expert? [Sanjeev's question]

And many others.

But first, let me outline the history of planning in India. Then I’ll outline some key suggestions made by others. Finally, I’ll propose my own thoughts.

The following article shows clearly and unambiguously that the idea of “planning” had STRONG socialist foundations. Even in capitalist nations, its use was founded on Keynesian (Fabian Socialist) ideas.

EXTRACT

From Raghabendra Chattopadhyay, An Early British Government Initiative in the Genesis of Indian Planning, Economic and Political Weekly, Vol. 22, No. 5 (Jan. 31, 1987), pp.19-29.

Roots of planning “ideas” in India

Gokhale in 1903, and K T Shah and Visvesvaraya himself, during the early twenties, had stressed upon the importance of economic planning.

The so-called “success” of soviet planning

It is widely acknowledged that the success of the first plan in Soviet Russia during 1928-33, in sharp contrast to the crisis of the Great Depression in the capitalist world, made the entire world ‘plan-conscious’. That success [Sanjeev: !!] led many of the non-socialist nations to take up planning as a serious measure to develop their economies and to attempt to solve their economic problems through planned state intervention.

The aspect of Soviet planning which attracted the non-socialist nations was not its function as the means to achieve a comprehensive social transformation but its mechanics, that is, planning as a technical economic method divorced from politics and intended chiefly to bolster capitalism through state-intervention. Planning, treated as an economic exercise could help to maintain the stability of a capitalist economy. [Sanjeev: Clear flavour of Keyensian ideas - that were still being formulated.]

The Fabian Socialist origins of planning in UK

The British economic advisory council was formed in January 1930 by the second Labour government in Britain soon after Ramsay MacDonald and his party had been elected to office in 1929.

Planning in India as a colonial tool

It also enabled, the colonial power in India to attempt a planned economic management to serve their own purpose of political legitimisation of the Raj through economic measures.

In 1930, George Schuster, the then finance member of the viceroy’s executive council, circulated a paper, ‘Notes on Economic Policy” within the different departments of the government of India. The idea of planning was mooted for the first time in the official circles in India in these ‘Notes’.

In the following paragraphs [writes Schuster] I set out certain general ideas which have been the subject of conversations between myself and several of my colleagues—principally the Hon’ble Member of Commerce and the former Hon’ble Members of Education, Health and Lands, and Industries and Labour. These conversations led to the preliminary discussion of a proposal for constituting in India something on the lines of the economic advisory council which has been created by the British government.

Crescendo of demand for state intervention in economy from Indians

In the early years of the thirties, people like Visvesvaraya, Mitter, Birla and Sarkar were enthused by the de facto recognition by the British rulers of the age-old Indian demand for a positive role of the state in organising socio-economic development of the country. This allowed them to formulate the blueprints of plans and appeal to the colonial regime to implement them.