Subir Roy: Yojana Bhavan is not for burning

VALUE FOR MONEY

The Planning Commission has just been given what is almost certainly its last chance to become useful and relevant.

By appointing Montek Singh Ahluwalia as its next deputy chairman, the government has created the possibility that it will reinvent itself into something which anyone will be proud, not embarrassed, to be associated with.

In its high noon, during the second five-year plan, the expertise with the Commission was extremely high by any standard. It provided an intellectual leadership to the then government. It was virtually Prime Minister Jawaharlal Nehru's own economic office. He used to come to it regularly and its staff felt like his own staff.

Today, it has become a departmental appendage to the government, with real economic power having shifted to the prime minister's office (in its own way the cabinet secretariat has also suffered a massive decline) and most significantly to the finance ministry.

As a result of becoming inconsequential, the self-esteem of the body and those who run it has suffered a serious decline. Its present condition is best symbolised by its most unflattering current role "" providing a parking ground for senior officials cooling off after a controversy or waiting for something better.

The threat to a meaningful role for the Planning Commission also comes from those who see no role for it at all in an age when central planning has been consigned to the historical dust heap.

But fortunately for the Commission, a large cross section of economic opinion, encompassing all except the extreme Right, wants the Commission to reinvent itself rather than sink into greater irrelevance.

Any country with a development goal ahead of it needs to have an apex economic think tank, particularly when democratic politics makes its leaders compulsorily focus on poor people and backward regions. (An NCAER or an IGIDR perform their useful narrower roles but ultimately an orchestra needs a conductor to harmonise the parts.)

Even those who do not care for redistributive policies and those targeted at laggards, and believe solely on growth, would need a think tank to chalk out how to accelerate growth. The post-war economic history of Japan and the other Asian Tigers, old and new, underlines the need to plan, even though plans often go wrong.

The raison d'etre for the Commission, say those who see a role for it, is that it alone can prepare a comprehensive macro-economic model with a sufficiently elaborate input-output matrix which can make meaningful and credible sectoral forecasts so as to provide a basis for policy.

They bemoan the fact that there has been no technical note for the last two Plans and even the note for the eighth Plan was merely an update on the previous one.

For example, unless you assign an appropriate role for software and BPO, how will you know what multiplier effect investment in education can have, and without it how will you make out a case for higher investment in technical education, public and private? Without a technically competent body, how will you have more efficient forecasting for the economy and its parts?

As the role, status and competence of the Planning Commission has declined because of a power shift to both the prime minister's office and the finance ministry, the Commission can only be put back on its feet by a prime minister who both understands its utility and knows how to order its revival.

Manmohan Singh has done just that by putting Ahluwalia in charge. The first think that he will need to do is ensure that the Commission gets up to date and quality data, at least that which already resides within the government but is prone to be jealously guarded by the respective ministries.

An internal 2000 study by the NDA government highlighted the fact that even when ministries had put their data online, they were loath to share the password with the Commission officials!

The Commission naturally needs to use the data effectively. This brings us to the way it is internally organised. At a time when ministries are getting atomised and you need to look at groups of them to get a sectoral picture, the Commission itself is aping the ministerial configuration more and more.

And within this framework, divisions get more and more hierarchical, sharing little with other divisions. The study recommended that for the Commission not to become a bureaucratic clone of the government, small mission groups need to be formed for individual tasks and disbanded once the task is complete. And since a lot of expertise has come up outside the government, the mission groups should systematically access these.

The intellectual poverty of the Commission stems from the fact that the new economic policies of the 1990s came to life outside it and it has ever since been trying to catch up and remain relevant.

The Commission has to again seize the intellectual initiative it had in the halcyon days of planning and what better way to do it than to put a leading global practitioner of the new economics and a key Indian architect of it like Ahluwalia at the helm.

Only when fresh, new, next-generation thinking comes to the Commission can it spell out policy alternatives to aid decision making, instead of being primarily concerned about not making waves within the government by being contrarian.

A key area that needs urgent attention is the states and their finances. The major governance challenge before the Centre is to get the states to improve their delivery to the poor and remain financially viable.

The way in which states' annual plans are finalised and how they eventually fare in comparison to the allocations approved, makes a mockery of planning. Amazingly, it is the Reserve Bank of India and not the Planning Commission that does the definitive annual study of states' finances.

During his last stint at the Planning Commission, Ahluwalia did a methodical study of the varying growth rates of states. He has thus cut out his own major task ahead "" how to start setting right this imbalance. This is a key mandate that the new government perceives for itself.

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