At a recent Planning Commission (PC) meeting to discuss the 12th Five Year Plan,a highlight of the prime ministers speech was about three future scenarios for the countrys economic growth. These three scenarios projected: an idyllic situation of strong inclusive growth,a situation with insufficient action and a dismal state of affairs with policy logjam. The central message was that policy inaction and logjams would lead to slowdown in economic growth and go against the tenets of inclusion and sustainability as envisioned in the 12th Plan document. The PMs talk on scenarios has generated interest in the public domain. How did these scenarios come about? What was the motivation for such an exercise and how does it connect with the Plan?
The scenario generation exercise was conducted in parallel with the preparation of the 12th Plan document. The need for the exercise stemmed from questions raised in recent times about the process and relevance of centralised planning. The PC was set up over 60 years ago and under completely different political and economic circumstances. With liberalisation,rapid growth of the private sector,and coalition governments being the norm,there is a perceived need to make the planning process more participatory.
The PC undertook a review of its purpose and performance in 2010. While the stakeholders agreed that the commission should change its ways,there was consensus that the country needs a central sense-making body more than ever before,given the unpredictable changes in the world and the country.
It is in this background the PC undertook an extensive exercise to prepare alternative scenarios of Indias future. The PC interfaced with close to 1,000 civil society organisations,industries,policymakers and research organisations. These discussions led to the identification of several major forces,which are likely to impact Indias future.
Using scenario-planning is not a new tool in planning. It was used widely by the Royal Dutch Shell Company for modelling scenarios of energy supply and demand in the 1970s and averted the 1973-74 oil crises. South African planners generated and widely communicated the Mont Fleur Scenarios in the early 1990s to get people from diverse backgrounds to dialogue the future of the post-apartheid state. The corporate sector routinely resorts to scenario-planning to project plausible scenarios to manage financial risks.
The PC and the Centre for Study of Science Technology and Policy (CSTEP) developed systems dynamics models to provide a rigorous grounding for interaction of these forces and develop plausible future scenarios. The forces identified included aspirations of citizens,demographics,democracy and its institutions,resource availability and uses,science and technology breakthroughs,innovations in business models,information-communication revolution and global and regional security threat.
Many of the strong forces that will shape our future are givens. For example,the demographics,projections of population,and the proportion of youth are given. However,other forces that will strongly shape our future too,are not necessarily givens. For instance,the increasing aspirations of citizens,including those of the middle class,youth,marginalised communities and increasing awareness of human rights. Another major force is the growing impatience with the trickle-down effects of economic growth,which results in protest and violence. Then there is mistrust for governance and institutions,big corporations,increasing distance between rulers and ruled,rampant corruption and the challenges of democratic politics. There is also the growing worry about the availability of energy sources,water and land to sustain the desired business-as-usual economic growth.
How does a combination of these interconnecting forces shape the future growth trajectory? A systems analysis reveals that the countrys future critically depends on the approach we adopt towards three main paradigms: (i) inclusion (enhancing livelihoods rather than relying on handouts and subsidies),(ii) governance (localised governance as against top-down centralised planning) and (iii) models for efficient use of natural resources: water,land,and energy. These three paradigms are mutually reinforcing.
For instance,what should be the approach towards inclusion? Should it be by continuing with handouts and subsidies to redistribute the wealth from the haves to the have-nots or should the emphasis be on creating more access to opportunities and livelihoods? It is now well known that the subsidy burden is becoming economically unaffordable. However,the transition from subsidies to sustainable livelihoods will need to be gradual and better planned.
The country is grappling with mistrust in governance and planning not just with one political party or ideology but the entire system of governance. There is a tendency to centralise when things are not in control and we require faster results. However,often the large diversity in the system may require strengthening of local governance to come up with local solutions with citizens participation.
Finally,how do we utilise the natural resources considering efficiency and equity? One extreme is the big project model,as scale leads to efficiency. At the other end is the small is beautiful,which creates more ownership and responsibility for the use and equity in distribution of benefits.
A systems approach generated numerous alternative scenarios for India and we considered three of them. In one,the country muddles along. The system cries for reform and we initiate some reforms. However,these are piecemeal. The centralised governance and big business continue to dominate leading to growing impatience and unrest. In the second scenario,the country remains stuck in centralised governance and exerts control in the face of demands for devolution,with mega schemes and projects and by redistribution of wealth through handouts and subsidies. The resulting impatience and protest and political logjam put us under severe stress,risking the falling apart of the political union itself. Finally,there is a scenario where the flotilla advances,where the federal governance system encourages local governance institutions and small enterprises,creating livelihood opportunities with efficient and equitable utilisation of resources.
Scenarios explain the consequences of our choices and the policy options we have. We must have a shared vision of what we as a country aspire to. Planners can only seed the conversations about a shared vision and facilitate multiple dialogues among citizens. Our exercise in scenario-planning was a small first step in this direction.
Maira is member,Planning Commission. Srinivasan,Das and Bharadwaj are with CSTEP,Bangalore