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Mainstream, VOL LIV No 26 New Delhi June 18, 2016

Fortunes of Planning Commission

Saturday 18 June 2016, by Nikhil Chakravartty

From N.C.’s Writings

A new Planning Commission has been announced with practically a combination of new and old members. Prof Madhu Dandavate is the new Deputy Chairman, as the Prime Minister continues to be the Chairman. When Narasimha Rao, by virtue of being the Prime Minister, was the Chairman of the Planning Commission, the post of the Deputy Chairman went to Pranab Mukherjee. That was more of a political appointment to find a respectable berth for a senior Congress leader although Pranab Babu can claim to have served as the Finance Minister in Indira Gandhi’s last Cabinet.

His narrow political horizon was betrayed in his functioning at the Yojana Bhavan itself. In the second half of last year, when the Planning Commission prepared the draft of the Mid-term Appraisal of the Eighth Plan, it was taken up for discussion within the Commission because it was due to be formally placed before the full plenary of the Commission itself. The normal procedure for such important documents is that after it is cleared by the full meeting of the Planning Commission, it has to go before the National Development Council for perusal, critical examination and then approval. When the Mid-term Appraisal document of the Eighth Plan was taken up, the Deputy Chairman, that is, Pranab Mukherjee, got cold feet as the document had brought out the negative developments in most of the key sectors during the period under review, that is, the first half of the Eighth Plan, which so happened, coincided roughly with the first four years of the new economic reforms as laid down by Dr Manmohan Singh and his Finance Ministry whiz-kids.

So, instead of placing it before the National Development Council as an objective assessment of the effects of the economic reforms from within the government, Pranab Mukherjee decided to virtually make it a non-document because he seemed to have felt that its publication might badly affect the fortunes of the ruling Congress party in the general elections then due to come in a few months. Actually, it would have done the Congress Government a lot of good in the public eye if it had allowed the publication in due course of the Planning Commission’s Mid-term Appraisal of the Eighth Plan. For one thing, it would have given the public a sense of confidence in the government’s claim to transparency in its functioning. Secondly, a critical evaluation of the economic reforms from within the government would have enhanced the public confidence in the government’s capacity and readiness not only to initiate the economic reforms programme but also to monitor its progress.

In the general elections, different issues cropped up at different places, but two issues were prominent throughout the general election campaign. Wherever the BJP stood, its opponent took up the question of communal harmony—secularism, as the cliché goes—and wherever the Congress candidate contested, he or she had to encounter sharp criticism about the condition of the common man. However, after the poll results were out, the convergence of political forces led to the isolation of the BJP and the coming together of all the others—whether in the United Front or as its fellow-traveller—and it was given out as if the verdict of the electorate was just against the BJP, while the differences over the economic reforms were more or less papered over.

As a matter of formally, of course, the Left parties and the Left-oriented section within the Janata Dal did say that they had serious objections to some of the features of Manmohan Singh’s economic reforms programme, though they did not make that an issue in the matter of formation of the new government or in extending support to it. Rather they were content to thrash out their differences with other sections of the United Front at the meetings of the Steering Committee of the Front, which led ultimately to the drafting of the Common Minnimum Programme.

In practice, however, the balance has shifted quite perceptibly to the upholders of Manmoha-nomics, with very little room left for the critics of that line. This is mainly because the new Finance Minister is himself more committed to the free-market line than Manmohan Singh, and also because Chidambaram has retained the entire Manmohan menagerie in the Finance Ministry. Moreover, Prime Minister Deve Gowda himself was undoubtedly more inclined to opening up for multinationals when he was the Chief Minister of Karnataka. Obviously, he has become a pillar of support for Chidambaram’s pro-market swing, including concessions to multi-nationals.

It is thus clear that the Planning Commission’s original role, as laid down under Jawaharlal Nehru to set out the lines of the basic economic strategy, has been considerably eroded over the years. The first attack on this came in 1966 when Indira Gandhi was under the spell of Asok Mehta who had tried but could not fully succeed in subverting the basic approach of the mixed economy. From the eighties, however, one could notice a new trend in the name of pragmatism to open up the economy for foreign capital. Then came Manmohan Singh’s blitz as per the World Bank dictates for Structural Adjustments. Most of these were accomplished outside the Planning Commission which was reduced to the status of a bystander under Manmohan Singh, Pranab Mukherjee and Narasimha Rao.

In this background, Prof Madhu Dandavate with his new team would be undertaking a difficult venture indeed. In his very first interview on taking over charge, Prof Dandavate has announced that the approach to the Ninth Plan would concentrate on “employment generation, eradication of poverty and removal of regional imbalances”. He has talked about “positive state intervention” through planning. It is true that the new panel of members for the Planning Commission contain names who will go along with this line. Incidentally, one of the new members, S.P. Shukla, was the Finance Secretary whom Dr Manmohan Singh had removed in 1991 to make room for Montek Singh Ahluwalia. Shukla’s mistake had been that he had fought the big powers in the GATT negotiations.

 However, it is highly problematic that the present government in which the economic policy is decided by the Deve Gowda-Chidambaram combine would at all relent on their adherence to the basic principle of the market economy which hardly leaves any room for state intervention.

It is not just a question of semantics, whether a particular line violates or not a specific formulation in the Common Minimum Programme of the United Front Government. The litmus test for assessing the validity of any plan or programme in our country today is: does it help to alleviate the burden of poverty borne by the majority of the people? The price for modernising the economy has to be paid by the people of this country, but by whom, the rich who are out to grab its benefits, or the poor who are told to wait for the millennium? Our economists must decide this key issue while expatiating on today’s buzzword: globalisation.

In any event, it would be interesting to watch how the Planning Commission is treated by the United Front Government. It would be important to watch whether the Planning Commission would be the vigilant watchdog, or a whimpering puppy. After all, the Deve Gowda Government has to keep up the facade of being Left-of-the-Centre, via the Common Minimum Programme.

[By arrangement with The Tribune]

(Mainstream, August 10, 1996)