Crux : India is yet to come with a basic social and physical infrastructure, since the time we got independence, Planning still remains need of hour for guiding macroeconomic policies.
Some quick points about planning:
Definition: Where macroeconomic policy of a country should aim & make finest use of resources accordingly.
Aim: Development that too sustainable development, improve social indicators
Planning before Independence:
National planning committee headed by Nehru in 1938, Important figure – Meghnad Saha with economist, professors and others..
British contributed to physical infrastructure, limited to their personal motives.
For formalized planning, British woke up late but till time they knew they lost the ground.
Planning after Independence:
Centralized planning adopted , i.e From center to states.
Planning commission in consultation with various dept. and on guidelines of National Development Council will formulate FYP (Five year plans).
National development council:
-PM+ All CM +All UM + MoS(Independent) + LG of UT’s
-Acted as advisory to Planning Commission but advises not binding
-The 58th meeting is yet to happen but makes no sense as NITI Governing council serve same purpose
Planning Commission(Dissolved in 2014):
-Chairman- PM (Ex officio)
-Vice chairman- Cabinet rant (Hence attended all cabinet meetings)
-Other ex officio were some Ministers like home, agriculture
-Formulated FYP with mid-term review
Now what UPSC demands as answer:
Aim of Planning Commission: Decide goal of macroeconomic policies & improve social indicators through planning
Objective: Formulate FYP with mid-term review
Supportive arguments: – Every economy, in process of development, comes out with 1st social and physical infrastructure & there after improves on that infrastructure. Planning commission main job was to speed up the process of reaching our country’s 1st social and physical Infrastructure.
– Not many resources were available at time of independence. Careful and wise planning was need of hour. So PC with centralized planning.
– With reduced fiscal deficit, Segregated Planned and Non-Planned expenditure still stand apropos in this phase of our economy
– Decentralized planning need of hour
– Need of More dynamic institute
– Post Economic reforms, resource allocation hugely driven by demand of Industries not only public but also private
– Horizon of 5 years doesn’t make sense. Either short duration in which time projects are completed time bound or a Foresight which gives us appropriate time to take correct measures.
– Low % of achievements of FYP .
– Planning commission approved state plans which was against spirit of federalism
– Policy framing in democracy is mostly arbitrary and adhoc.
Way Forward :
More dynamic institution which use down-top methodology for making blueprint of planning for our economy is need of present, with clear goal of financial inclusion & Social development.
– Decentralized planning i.e start aggregation of plan from : Village -> Tehsil -> district -> State + NITI + Center
– This is known as Bottom-UP approach
– Planning at Macro-level and Sectoral level
– Indicative Planning
– It will not approve state plans rather superimpose plans by first collecting them
– To summarize : NITI = DSP
– Huge Data with NITI available which provide immense help in planning
– State role crucial
– Planning which is attentiveness to future
-VC (If VC has Cabinet rank, she/he will attend cabinet meeting like VC of PC)
-4 union minister as ex-officio (Less compared to Planning commission)
-CEO appointed by PM
-Part time members
Governing council : PM + All CM + All LG of UT’s
Regional Council: say 3 CM’s and 1 LG for a special purpose,say conflict resolution, with other member who should be there.
-Still crowded with union ministers
-Can’t make pressure on state govt. to make wise use of money as Planning commission did by providing money in installment.
-The mandate of NITI itself makes it weaker: “It is a commission to help govt. in social and economic issues” i.e spheres and quantum of help still vague and will be decided timely.
– Planning reports will not be binding on expenditures like planned expenditure during Planning commission regime.
More dynamic institution for planning in India was need of present to speed up process of development and financial inclusion.
The simple example is villages with no reach of electricity and access to drinking water. This basic infrastructure is whole idea of starting planning in economy. But continuing planning with huge soaring fiscal deficit tells inability to create new economic activities. Added with grass root level corruption tells difference between projections and achievements of planning.
Moving Forward with an institution like NITI AAYOG seems correction step only as demanded by time, as we need more dedicated and dynamic institution to see fruits of planning.