What’s the plan for India’s century?

The Planning Commission was set up in 1950. It has evolved in the 64 years of its existence. India and the world have, however, changed much more in the same time. Thus the gap between what the country needs now and what the Planning Commission is doing has become very wide.

When the Planning Commission was set up, India's economy was much smaller; it was less diverse (with a much smaller private sector, too); and, it was not tied into the global economy on the scale it is now. Politically, too, the structure of the country was different then. One large political party ruled, with a majority at the Centre and in almost all the states, too. In those circumstances central planning, with resource allocations and directions from the centre, could work. It was required, too. Therefore, a central Planning Commission could and did make good contributions to get the country’s development and growth moving.

But as India has changed, faster than the Planning Commission has, the methods it is using have become less relevant and less useful.
The Indian economy has been opened up with reforms since the late 1980s. Connections between India’s economy and the global economy have thickened. At the same time, the political configuration in India became more plural; regional parties became ascendant in the states, and coalitions became the norm at the centre. A new dynamism and new uncertainties were introduced into the Indian economy. Amidst all this, planning processes, founded in a top-down and deterministic paradigm, with concomitant tendencies towards ‘one size fits all’ solutions, became less effective. They even became a hindrance to the innovations that were required and that began to emerge in the states.

Rusting on its laurels
Some attempts have been made since the late 1980s to nudge the Planning Commission to change faster, to catch up with the changes that were taking place in India and the world. Sadly these attempts to change it could not budge the institution enough out of the rut into which it was sinking. There is a saying: ‘Institutions earn their laurels. Then they rest on their laurels. Resting too long, they begin to rust in their laurels’. Perhaps this is the story of India's Planning Commission.

Change in India has accelerated in the new millennium. The new and younger India requires a 'Planning Commission' (or body by whatever name) to shed some old functions and to learn new ones. Can the old institution rapidly learn these new functions? Is it willing to shed its old ways? If the answers to these questions are ‘no’, then there is a need to replace the institution with another that can perform the new functions required.

Some of these new functions are:

1) A replacement of the out-moded 5-year Plan process tied up with budgetary allocations, with a more dynamic planning process that guides the actions of several independent actors—the states, the private sector, and even central ministries. The Planning Commission can no longer have the sort of power through its central authority that it used to have to determine the sizes of industries and control their investments, and to determine states' plans, though it may hanker to have such power. As mentioned before, the shape of the economy and polity has changed. Modern, dynamic, systems thinking based, ‘scenario planning’ processes are required, instead of planning processes tied to budgetary allocations.

2) Facilitate faster learning in the states to produce the results they need. For this, set up lateral learning processes amongst the states, rather than bringing in the states, one by one, for an annual evaluation by the head master, which is how most states perceive the annual ritual of the state plan approval exercise.

3) Introduce systematic methods to enable coordination amongst stakeholders— amongst the states, amongst the ministries, and amongst government, civil society, industry stakeholders—so that the bottlenecks that have been arising due to conflict amongst these stakeholders, which have been slowing down India’s growth and development, do not arise. Such methods are being applied in other countries. India, with its diversity, democracy, and its requirement of faster development, needs such systematic methods more than any other country.

4) The new institution into which the Planning Commission should morph must be a small catalytic organisation, rather than the large monolith the Planning Commission has become, stuffed with presumed experts who evaluate the plans of states and ministries without adding much value to them.

The performance of these new functions requires people with a very different mind-set: people who seek to facilitate and enable, and not to check and control; and who are rapid learners, not stuck in old paradigms. Certainly, the new institution cannot be a ‘parking lot’ for bureaucrats and political appointees.
This is what the new body must do and what it must be. Can the old body transform into this? The country is impatient and needs to accelerate its development to meet the unfulfilled needs and rising aspirations of its citizens. If the old body is unwilling or incapable of making this transformation of itself, as evidence so far shows, then another body, on the lines described above, will have to take its place.

Models of central institutions that other countries have adopted to guide their development should be considered, but with caution. The National Development and Reforms Commission (NDRC) of China attracts attention because China has progressed much faster than India in the past 25 years. The NDRC has enormous clout in China. It is reported that it influences even the appointment of governors of provinces and mayors of cities. This is possible because the Communist Party has a monopoly of political power throughout the country. Such power to change chief ministers of states would be unthinkable in India.

Therefore the Indian ‘planning’ institution must develop other ways to persuade change, rather than demand more authority as the NDRC appears to have. A different mind-set, different skills, and different ways to make the states follow its advice must be found. Perhaps the ways in which Australia’s Productivity Commission functions, or the solutions being designed for the democratic, entrepreneurial state of California for ‘Think Long’ planning and governance, may be better models for a federal, democratic, and politically plural India. The point is, the solution proposed must fit the context in which it is to be applied.

India’s Planning Commission is rusting on the laurels it earned in the past. It has been unable to make the transformation in its orientation from Soviet-style planning, with power over others, on which it was founded. When the new functions it must perform, mentioned before, were introduced into the Planning Commission in the past four years, the internal organisation resisted their assimilation. The old ways carried on.

Change is always resisted. How shall we create the new capabilities in an institution the country needs at the centre to guide its progress? Can we obtain what we need by marginal changes in the existing institution? The evidence is, we cannot. The gap between what is required, on the one hand, and the form and capabilities of the present institution, on the other, has become too large. A new institution is required, although it may use some capabilities of the old one.

Get the design right
All reforms of institutions take place in the real world. Inevitably, implementation of institutional reforms will require compromises with existing realities. Therefore, first the ideal must be visualised as a reference, so that a bad compromise can be distinguished from a good one.
The process of designing the new institution, and the determination of how much of the old one it can use, must follow five steps.

1First, define what the new institution must do. This is the objective. To be clear about this objective, work from outside in. Ask, what does the country need, and what do the stakeholders of the new institution require of it?

2When the objective and principal functions are defined, think of the name for this institution (to reflect what it will do).

3Only after the first step of defining the goal and functions of the institution, determine who will be its leaders. They must have the orientation and skills the institution needs.

4Along with these leaders, determine what other capabilities the institution must have.

5Only then consider, can any of the personnel and processes of the existing institution fit into the requirements of the new one.

The decision to create a new institution has been taken. The country needs one. Now, we must design it right. Above all, whether the new institution’s leaders are economists or engineers, they must have the will and the skills to build an institution, and not merely use their positions as pedestals for personal visibility.

Arun Maira
is former Member, Planning Commission, and author of the recently published book, “Redesigning the Aeroplane While Flying: Reforming Institutions”.