Updated: November 23, 2015 1:24:05 am
Former Prime Minister Manmohan Singh has lambasted the Narendra Modi government for abolishing the Planning Commission, which he believes has been “harmful for the country” and resulted in economic policy losing a “sense of direction”. The criticism has some basis not because the disbanded panel was “a positive dynamic instrument of steering the country’s economy”, in Singh’s words, but for the lack of clarity over the role and functioning of the institution that has replaced it.
More than 10 months into its existence, there is little to show in terms of what the NITI Aayog — the National Institution for Transforming India — has sought to accomplish, despite being led by the distinguished Columbia University economics professor Arvind Panagariya. In terms of its structure and bureaucratic personnel, the Aayog is similar to the now defunct commission. There is a Facebook page as well as a Twitter account (with close to seven lakh followers). Yet, what substantive work the Aayog does is not really known.
To be sure, the Planning Commission’s old role of formulating five-year plans and setting individual sectoral targets was an anachronism in the post-1991 liberalised Indian economy, where production and investment decisions are predominantly taken by private players responding to dynamic market signals.
Likewise, the fixing of plan sizes of states by the Centre, and even telling them which schemes or sectors to spend their monies on, clearly have no place in an increasingly federal polity. While Singh may feel nostalgia for an institution of which he was deputy chairman in the mid-1980s, the fact is that not many tears were shed when Modi announced its scrapping in his Independence Day address last year.
But that said, there cannot be any doubt about the need for a body capable of undertaking strategic economic thinking, which one cannot expect beyond a point from a finance ministry preoccupied with more short-term revenue or growth concerns. The same goes for influencing states to initiate reforms and focus on areas (climate change, agricultural extension, water conservation, devolving more powers to local bodies, etc) that they would not in the normal course.
There is certainly a role today for an institution that can effectively work towards these goals — as a think-tank straddling different departments and pro-actively engaging with industry and other key economic stakeholders. While abolishing the Planning Commission has caused no grave harm to the economy, its “successor in interest” has not demonstrated any evidence of being relevant either so far.
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