Subir Gokarn: The virtues of inclusiveness

One should rather question the wisdom of excluding some sections from the consultative groups

An apparently routine process has snowballed into what is perhaps the UPA's biggest political challenge yet. Mid-term appraisals are integral to any planning process, be they for public policy or corporate strategy.

This particular one introduced what seemed like a new twist to the process. It constituted wide-ranging groups for each set of issues, reflective of the entire spectrum of opinions. But, what may be a first for the Planning Commission is actually by now an entrenched and widespread practice in policy and strategy formulation.

It is difficult to date the transition from what might be called an "exclusive" to an "inclusive" process. In corporate finance and governance, for example, around the mid-1980s, the literature revealed a change of emphasis from the relatively narrow definition of the corporate objective""maximisation of shareholder value""to a more broadly defined concept of "stakeholder" interests.

The basic logic was that long-term performance, for that matter, even survival, of corporations was dependent on managements' ability to balance a wide number of different, often conflicting, interests. Shareholder wealth mattered of course, but an exclusive pursuit of this objective could result in the alienation of other groups that were critical to the overall success of the organisation""employees, customers, suppliers, the local community, even society at large. Evidence suggested that corporate success and endurance were related to the ability to find a balance between these.

These days, judgments on corporate governance typically give significant weight to the way in which management systems take account of the interests of groups other than shareholders.

Certainly, by the late 1980s or early 1990s, development agencies, both multilateral and bilateral, were in the process of a very similar transition.

The top-down, paternalistic approach that had dominated development funding till then was clearly being displaced by an inclusive, consultative process in which donor/lender interests, objectives, and perceptions were brought face-to-face with the priorities, concerns and attitudes of the intended beneficiaries.

Both the content of development projects and the design of delivery mechanisms were supposed to benefit from this interaction, leading to far more efficient use of development resources.

At both levels, the transitions, while difficult to question on the basis of desirability, have raised several issues relating to practicality and feasibility.

Tightly structured organisations, be they corporations, multilateral agencies, or government departments, function best when the directions given are clear and unambiguous.

Grand visions at the top need to be translated into measurable goals and concrete tasks for each level of the hierarchy, if there are any hopes they being implemented.

Such a process is not inherently contradictory to the notion of inclusiveness. But, keeping human capabilities and limitations in mind, the more "noise" there is in the system, by virtue of multiple and heterogeneous stakeholder views and priorities, the more difficult the exercise is.

From a purely functional point of view, the good intentions that give rise to inclusiveness often take a back seat to the compulsions of managing the process, which tends to favour a more exclusive approach by way of emphasising the interests of one or a small number of the stakeholders.

This is the essential challenge that any organisation faces and it is particularly striking in the case of the Planning Commission in today's circumstances.

It is engaging in this apparently routine process of appraisal in a situation where the entire fundamentals of the policy framework on which the plan is based are being brought into question.

The process then is actually anything but routine; far from being a "mid-term appraisal", it is a re-examination of the building blocks themselves. The hard constraints need to be prioritised, solutions agreed upon, and the role of various participants/stakeholders specified""public and private, domestic and foreign, national and local. At the same time, there is a strong compulsion to get the process over with as quickly as possible and get down to the business of implementation.

Given the need to resolve the trade-off between representativeness and speed, all-inclusive consultative groups were an obvious solution. If one believes that foreign agencies""development or otherwise""are stakeholders, then, there is no question. They should be included.

Keep in mind that in the inclusive approach, a stakeholder is defined as anybody who has an interest in the process and its outcome, regardless of how narrow and exclusive that interest itself might be.

There are two main reasons that the Planning Commission provides for including representatives of foreign organisations. One, many of them have substantial exposures and commitments to programmes in India.

That makes them, willy-nilly, part of the country's landscape. Two, they bring to the table their organisations' collective experience and learning from activities across the globe.

But, as valid as these may be, they do not address the primary criticism that they will inevitably push agendas that are hostile to the national interest; that all their international experiences and learnings will be given a slant consistent with their current global agendas.

I am fully sympathetic to the "commitment plus learning" argument in favour of including representatives of foreign agencies in the consultative process.

However, going by the arguments in favour of stakeholder inclusion, I think that the fact that they may have their own axes to grind, their own narrow interests to promote, makes their participation that much more important.

If one goes by the composition of the committees, there is no question that they cover a wide range of petty narrowly defined interests; very few people could credibly claim to be speaking for the "nation as a whole" or any such noble sentiment.

For instance, industry associations, both the umbrella bodies and those representing individual sectors, are being given their voice. They, with complete legitimacy, represent the interests of their members (amongst whom there are foreign companies), which are often in visible conflict with the interests of the members of some other association or group represented in the process.

It is not for any group to project anything more than their own interests. Many tend to couch theirs in terms of broader objectives, but this is more an issue of the style of communication than anything else.

The best possible outcome of this process would be that every group puts forward, explicitly and logically, where its interests lie. The tendency to couch these in broader interests, while understandable, should be resisted and, in any case, will be discounted by the Commission.

In fact, going by the apparent virtues of inclusiveness, the question that should be asked is not why some groups were included but why others were excluded. But, that is another story.

(The writer is Chief Economist, Crisil, and member of two consultative groups set up by the Planning Commission. The views are personal)