Millennium Post

Big step towards federalism

Big step towards federalism
The Modi government’s decision to do away with the six decade old Planning Commission is an important exercise in a federal setup like ours. Modi had made this announcement from the ramparts of Red Fort during his first Independence Day speech. This week the move towards strengthening our federal structure was taken forward with a meeting of chief ministers, where they discussed ways to create a new body. As expected, politics has crept into this important issue and efforts to sort out differences at the PM’s retreat did not work. While the NDA chief ministers endorsed Modi’s view, their counterparts  in the UPA-ruled states opposed with the idea that it was being done with a view to get rid of the Nehruvian legacy.

“We will replace the Planning Commission with a new institution having a new design and structure, a new body, a new soul, a new thinking, a new direction, a new faith towards forging a new direction to lead the country, based on creative thinking, public-private partnership, optimum utilization of resources, utilization of youth power of the nation, to promote the aspirations of state governments seeking development, to empower the state governments and to empower the federal structure,” Modi said. It is indeed a huge task. This is not the first time the government is dismissive of the Commission. Rajiv Gandhi called commission a bunch of jokers, though he stopped short of dismantling it.

The BJP in its 1998 manifesto said, “The Planning Commission will be reformed and reorganised in light of the changing developmental needs of our country”.  The revamp plan during its 13 months in office also explored the possibility. Former Planning Commission Deputy Chairmen like KC Pant and even Manmohan Singh made attempts to explore changes. From a highly centralised planning system, the Indian economy is gradually moving towards indicative planning, where the commission’s role is changing gradually.

The arguments for setting up the new body is that the centralized planning concept cannot work in  vastly different circumstances to those before liberalisation. First of all, times have changed and issues have changed and Nehru himself would have been the first to say that the commission needs a relook had he been alive. In a market economy the planning process needs a different orientation and outlook.

Secondly, many state chief ministers had complained about having to visit Yojna Bhavan and go through the annual ritual of getting approval for their annual plans. Modi too must have resented this exercise as the Gujarat chief minister and made a mental note of it to rectify when he walked into the PMO. Essentially the states want more say in a federal setup.
 
Thirdly, the role of Planning Commission after liberalisation had nothing to do with keeping the commanding heights of the economy with the public sector. The public sector itself needs reforms.
Fourthly, Modi’s critics say that he wants to dump Nehru’s legacy and doing away with the Planning Commission is one of them. When the Commission came into being in February 1950, it was during an era of centralized planning. 

It assessed the assets of the country and formulated plans for their use. It reviewed and discussed social and economic policies that affected national development. It also allocated funds for the centrally sponsored schemes. The commission claimed credit for the increased agricultural and industrial production, modernisation of technology, liberalisation of the economy and improvement in social indicators over the years.

So what kind of a body is going to replace the Commission? If one goes by the presentation given by the Planning Commission Secretary Sindhusree Khuller to the chief ministers, the Prime Minister will head the new institution, which should act as a think tank. It may have 8 to 10 regular members with half of them representing the states. The chief ministers would be members by rotation and  its remaining members could be experts in various fields. The new body could provide internal consultancy services to states and the Centre on different matters. It would monitor, evaluate, programme projects, conduct cross-sectoral and inter ministerial exercise and appraisal of projects. It is not clear how long it will take for the new body to emerge.

Now that a decision has been taken, there are several questions, which require clarity. The meeting  with various chief ministers this week has not found an answer as to who would allocate funds and transfer it from the centre to the states. Will it be attached to the Finance Ministry or the PMO? What happens to the NDC, which has a special place in the federal setup? Who will formulate and monitor the annual and five-year plans or will there be no planning?  What about the centrally sponsored schemes? No doubt the Financial Commission will have a bigger role. Who will arbiter the disputes between the states? Will it get a statutory status?

Once answers to these questions emerge, then the new body could function smoothly. But care must be taken to ensure the independence of the new body.  There should be transparency in the selection of its members.  It should also remain apolitical to win the trust of various chief ministers.  With the prime minister’s weight behind it, the new body should be able attract the highest talent in the country. How far the government accepts its recommendations will also depends on the prime minister. In short the new body should be able to function smoothly and effectively without interference from the political class. IPA
Kalyani Shankar

Kalyani Shankar

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