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From Planning Commission to NITI

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  4 Jan 2015 12:00 AM GMT

D. N. Bezboruah

On New Year’s Day, the rendra Modi government replaced the 65–year–old Planning Commission with the Niti Aayog. The word niti has a gamut of meanings starting from morality, moral science, ethics, principles, a method or means of policy and so on. However, apart from the varied nuances and their extensions of the Sanskrit word, NITI is also an acronym for tiol Institution for Transforming India. So the new me for the organization that has replaced the Planning Commission is Niti Aayog. Like the Planning Commission, the Prime Minister will head the new setup that the government says is being built on the spirit of cooperative federalism. All the chief ministers of the States of India will be on the governing council that will frame tiol development priorities.

The Aayog has been described as the think tank for both the Centre and the States, and as “a directiol and policy dymo” providing strategic and technical advice on key policy matters including economic issues of tiol and intertiol importance. There is no denying that the 65–year–old Planning Commission, formed under an executive fiat in 1950, had tremendous influence over the pace of development in the country but had increasingly become a meddlesome and irritating obstacle to progress due to its tendency to thrust gratuitous advice and States that had no need for such advice. It also had discretiory powers over providing a part of the funds to the States. This discretiory power tended to put chief ministers of States on the back foot and to swallow their self–esteem lest there be drastic cuts of what the Planning Commission be prepared to allocate to the States as development funds.

However, this is not the only disability that the Planning Commission suffered from. Created on the Soviet model, the Planning Commission became the progenitor of the plan economy in India as well. As such, the cost of projects became totally irrelevant even for a poor country like India. At the beginning, whenever a project was seen to lack viability, to become a white elephant incurring huge losses or to be uffordably expensive, senior bureaucrats did present such uppetizing truths to the then Prime Minister Jawaharlal Nehru. But almost invariably the response was, “Don’t talk to me about profits. Profit is a dirty word.” Heads of large public sector undertakings began to look upon this remark as a sort of licence not to worry about the ultimate cost of a project, its profitability or viability. In my humble opinion it is this attitude of looking upon development projects funded with public money as having a carte blanche to make losses and not to worry at all about not making losses. I think it is this attitude encouraged by Pandit Nehru and sustained by the Planning Commission over the years that has been greatly responsible for creating a large number of sick public sector undertakings (PSUs) that have to be sustained year after year with huge subsidies because our politicians too have taken the advantage of insisting on such PSUs recruiting a huge workforce far in excess of the actual requirements, merely to provide employment. It did not take very long for such PSUs to have huge armies of workers who did not have to work. Over the years, it has not been possible to stop subsidies to such sick PSUs merely because this would lead to large–scale retrenchments with adverse fallouts for the electoral equations of political parties. As such, while the Nehruvian model of development has certainly led to the creation and expansion of much of our infrastructure as well as some development of India, this development has come at great cost to the tion. It has also led to several front ranking public sector undertakings of India failing or having to be wound up. One wishes that there would be a large number of sick PSUs wound up so that the burden of subsidies on our exchequer could be reduced and the tiol budget would have some chance of drastically reducing the fiscal deficits to reasoble and mageable levels. As of now, there are very slim chances of this happening largely because of political considerations that stand in the way of closing up sick PSUs and drastically bringing our annual fiscal deposits.

There are built–in mechanisms in the formation of the Niti Aayog that would seem to take care of some of the problems the Planning Commission has faced over the years. In the first place, it is likely to underscore the federal principle that ought to be the guiding spirit of such organizations. So, instead of a member secretary that the Planning Commission had, Niti Aayog will have a chief executive. It will also have full–time members and part–time members drawn from universities. One convention of the Planning Commission that would remain is that four Cabinet ministers would be nomited as ex–officio members of the Aayog. The broad objectives of the Niti Aayog, apart from acting as a think tank for the Centre and the States and providing the strategic advice on key elements of policy, are that it will also design strategic and long–term policy and programme frameworks and initiatives as well as monitoring their progress and efficiency. It is expected to offer a platform for resolution of inter–sectoral and interdepartmental issues besides monitoring and evaluating the implementation of programmes and initiatives. The Niti Aayog will not retain any of the discretiory funding powers that the Planning Commission had. Instead, all funding powers will now devolve to the Fince Ministry. According to official sources, the Niti Aayog would work with Central ministries and States to formalize plans to create mega– industrial clusters within the industrial corridors planned along the Mumbai–Delhi and Delhi–Kolkata freight corridors.

Much of the criticism relating to the disbanding of the Planning Commission and the creation of the Niti Aayog is prejudicial in ture because such criticism so far has arisen from fears of what is likely to happen. Congress spokesperson Manish Tiwari said on Thursday, “If the government wants to greet people with fluff and not substance on the first day of 2015, then there is nothing more that can be said.” He also expressed the fear that the Fince Ministry, with its new–found powers over allocation of additiol funds to States, would discrimite among States. This is a rather far–fetched assessment of a possible happening considering that the Fince Ministry has been allocating the bulk of the funds to the States for years together. How is it likely that the powers to allocate just the additiol funds (that had been allocated earlier by the Planning Commission) would result in such discrimition? CPM leader Sitaram Yechuri was of the view that a mere change in the me did not signify anything. “Let us see what the government can do with it,” he said. CPI leader Gurudas Dasgupta said, “The Planning Commission is being abolished because they (the Modi government) don’t believe in planning. The government would like to have a full market that is totally unregulated.” These are observations that relate to what might happen rather than what has already happened. They are speculative comments. Has Chi not already moved on to the market economy and prospered immensely as a consequence? And what about the constituents of the former USSR? How many of them have been able to resist the pressures of the free market economy? Those who resist the inevitable trends keep forgetting that a single country or two are going to be uble to resist the global economic changes that are taking place. One has seen how a country like Myanmar has got isolated as result of declining to accept the economic changes.

It is hardly anyone’s plea that there should be no criticism of the NITI. However, criticism that comes even before the organization has begun to function can only be prejudicial in ture. Nor can the change of structure alone be a justification for criticism. After all, change is inevitable and the only phenomenon that is permanent. And any change that is likely to rid us of sick PSUs and save us the loot of astronomical sums of subsidies is all for the better. That is why we should give the NITI at least a year or two of trial before making any adverse forecasts that may turn out to be entirely misplaced.

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