The Planning Commission and 5-year plans: India
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'90s' liberalism triggered decline of planning era
The Times of India Aug 18 2014
What was the need to have a Planning Commission?
The early days of Independence were chaotic in terms of economic planning. The geographical and economic statistics of the country required drastic revision. India was formed after the integration of many former Indian states that were earlier being governed in different ways. The influx of several million people after partition had aggravated the country's food supply problems. The econo my had also inherited the in flationary pressure caused by World War II and the private sector was not strong and confident enough to step forth. A fresh assessment of the financial and other resources was required and in 1949 the Advisory Plan ning Board appointed by the interim government recom mended the appointment of a Planning Commission.
When was the Planning Commission formed?
The Planning Commission was set up in March 1950 as an executive arm of the Union government and was chaired by Pandit Jawaharlal Nehru, the PM at that time. It was responsible for making an assessment of all the country's resources and planning how they could be used most efficiently. Also, it was supposed to identify the most important priorities of the govern ment. In 1953, scientist and statistician PC Mahalanobis joined the commission.
Are five-year plans (FYPs) unique to India? FYPs were first im plemented by Joseph Stalin in Soviet Un ion in the late 1920s.
This method was ad opted by many other countries. Among the bigger economies, China and India both have continued to use FYPs. China, howev er, has renamed its eleventh FYP (2006-2010) as a guideline (guihua) rather than a plan (jihua). This is seen as the central govern ment signalling a relatively non-interventionist appr oach in economic planning.
What were the focuses of different five-year plans?
The first FYP was focused on agriculture, price stability , power and transport. The sec ond focused on rapid industri alization and was moderately successful at a time when the country faced an acute short age of foreign exchange. The third gave top priority to agriculture to support industries and export, but was a complete failure because of the Indo-China war (1962), Indo-Pak war (1965) and severe drought 1965-66. Defence became an important priority. Thus, the first three FYPs saw resources being spent on creating the massive public sector (steel, rail, power) and building of key infrastructure (hydel projects). Subsequent plans encouraged the Green Revolution, making India self-reliant in food and so on. Since the eighth Plan (1992-97), focus shifted to liberalization and, with that, the decline of the planning process itself.
What are plan holidays?
Plan holidays are declared for years when government is not in the position to make a five-year plan. The Indo-Pak conflict of 1965 caused the first break. Between 1966 and 1969, the government operated through three annual plans. Similarly in 1990, the eighth FYP could not take off because of an unstable political situation.
Niti Aayog (estd. 2014)
How it is different from the Planning Commission
It is performing vital functions that are fundamentally different from the Planning Commission
Niti Aayog turned two years old on Jan 1, 2017.
Two key activities of the Planning Commission had been to prepare and implement the Five Year Plans and to allocate financial resources to states.Neither of these activities forms a part of the mandate of Niti Aayog. The Twelfth Five Year Plan, which will conclude on March 31 this year, will be India's last Five Year Plan.
Likewise, Niti Aayog does not allocate any financial resources to states. The 14th Finance Commission raised the share of states in the divisible pool from 32% to 42%, leaving no additional funds for allocation to states through Niti Aayog. The annual resource allocation exercise that brought state chief ministers to the doorstep of the Planning Commission is now a thing of the past.
Among many functions that Niti Aayog performs, three stand out: promotion of cooperative, competitive federalism; assisting the central government in policy making; and serving as the government's thinktank. These three functions complement each other instead of being mutually exclusive.
The Governing Council of Niti Aayog, which includes all state chief ministers and lieutenant governors of the Union territories, set in motion the first function at its maiden meeting on February 8, 2015. It appointed three subgroups of chief ministers to advise the central government on the subjects of Centrally Sponsored Schemes, Skill Development and Swachh Bharat Mission. It also set up two task forces at the Aayog on Agricultural Development and Elimination of Poverty , with parallel task forces on each subject constituted in the states and Union territories.
Assisted by the Aayog, the subgroups completed their work and submitted the reports in relatively short time. The two task forces followed. The recommendations in the five reports have been either implemented or are under consideration.
The Aayog has also helped promote reforms in the states. It has formulated a model land-leasing law, which Madhya Pradesh has adopted and Uttar Pradesh has substantially incorporated into a preexisting law. Several other states are actively considering adopting the model law.
The Aayog is also leading a campaign to bring about major reforms in agricultural marketing. Furthermore, it has taken the initiative to help resolve and expedite decisions on numerous issues of states pending for months with various central ministries. It also identifies and spreads the best practices across states in various areas through regular interactions with state officials from relevant ministries.
In its policy making role at the Centre, the Aayog has taken the initiative to identify numerous sick Public Sector units for closure. Action on 17 such units is under way . The Aayog has also identified several functioning units for strategic disinvestment. Finance ministry must now move ahead with the actual sales of these units.
A big bang reform the Aayog has proposed is the replacement of the Indian Medical Council Act, 1956, by a Medical Education Commission Act to overhaul medical education in India.The proposed Act would require entrance and exit examinations and replace input norms in the assessment of medical colleges by outcome norms. A comprehensive National Energy Policy draft is ready to be placed in public domain for wider consultation.The Aayog is also working on the creation of 20 world-class universities and reform of the University Grants Commission Act, 1956 and All India Council of Technical Education Act, 1987. It has also championed the launch of Coastal Employment Zones to accelerate the creation of well-paid jobs.
As a part of its thinktank function, the Aayog has brought out a book of best practices, conducted workshops of state officials to spread these practices, collaborated with thinktanks, created the utility India Energy Security Scenarios 2047, sponsored policy research and published several occasional papers. It is also in the process of bringing out the 15-year Vision, 7-year Strategyand 3-year Action Plan documents.
It also organises the Transforming India lecture series featuring such high-profile speakers as Tharman Shanmugaratnam, Deputy Prime Minister of Singapore and Bill Gates. The Prime Minister, the entire Cabinet and the top bureaucrats attend these lectures.
The Aayog has also led the way for the creation of a vibrant innovation and entrepreneurship ecosystem in the country through its Atal Innovation Mission. The mission will soon establish tinkering labs in more than 200 schools as well as several incubators to promote innovation and entrepreneurship.
Organisationally , the Aayog had inherited 1,200 positions from the Planning Commission, which it downsized to 500.Subsequently , it has taken the initiative to appoint approximately 45 young professionals and a dozen senior officers from outside. These additions have brought great energy to the institution.
When the Prime Minister invited me to join the Niti Aayog two years ago, the excitement of assisting him in the transformation of India overwhelmed the fear of taking up the challenge. I instantly accepted his generous offer. I feel proud, two years later, of what the hard-working staff of Niti Aayog have accomplished. I hope we can maintain this momentum as we step into our third year.