Business Today

Montek's manifesto

Yojana Bhavan is abuzz with strategy and some existential thoughts in yet another search for its relevance.

Puja Mehra | Print Edition: Feb 6, 2011

In late 1998, Arun Maira wrote a letter from the United States to Montek Singh Ahluwalia, then a mere member of the Planning Commission. Maira does not have a copy of the letter, but remembers telling his former junior at Delhi's St Stephen's College something like this: "In this post-liberalisation age, how can planning be done in the same old way and how can you, a respected person, be inside the Planning Commission when it is so? You'd be laughed at." The outburst, Maira recounts, came in the backdrop of central economic planning getting redefined elsewhere in the world. Maira was then with Arthur D. Little, the international consultancy, and had a strong world view of transforming economics.

Visiting the Commission's Yojana Bhavan office in central Delhi a month after he wrote the letter, Maira found Ahluwalia frustrated with the body's ineffectiveness: "Walking around the office, he showed me cupboards full of reports. He told me that on every subject the Commission had the best know-how and yet it could not make things happen."

Ahluwalia, Deputy Chairperson since 2004, still cannot make things happen through the Commission. Few states or Central ministries take the preparation of Plans seriously, even though, with rapidly rising Plan Expenditure (Rs 3.75 lakh crore in 2010-2011), the Commission's scope to shape things has widened.

Arun Maira, Member, Planning Commission

We have to transform the panel into a set of thought leaders, coaches and guides that the states would want to consult 
Arun Maira, Member, Planning Commission
"There is a tendency to cut and paste from previous Plan documents," rues a Montek aide. Take the case of ICDS or the Integrated Child Development Scheme, which has been around for 36 years without making much difference to the abysmal state of the health and nutrition of Indian children.

Ideally, such schemes should be reviewed between Plans. But the ICDS has remained untouched. India's five-year plans have always been about targets and fund allocations: targets that are missed by huge margins and allocations that fail to produce intended outcomes.

(The 11th Plan target for addition of power generation capacity was revised from 78,700 MW to 62,374 MW; the capacity achieved by 2012 will be around half this.) Some of that may change. With the help of Maira, now a member of the Commission, Ahluwalia is reinventing planning. "We have identified key strategy challenges that we must address," Ahluwalia told Business Today (Read interview, "We have identified key strategy challenges ").

Ahluwalia reckons planning can be rejuvenated by adding a dash of strategising: getting planners to ask themselves what they can do to ensure that the targets they set are achieved. The process of preparing the approach paper to the 12th Five Year Plan, 2012-17, is being redesigned. The states and the Centre will have to specify the strategies they will adopt to hit the targets they set. So a health department's plan will be judged incomplete unless it spells out how many doctors and nurses will be required and how it plans to get them.

 Thou shalt strategise

This is what the 12th Five Year Plan will get the states to address

  • Enhancing the capacity for growth
  • Upgrading skills and faster generation of employment
  • Managing the environment
  • Make markets efficient and inclusive
  • More decentralisation and empowerment
  • Better technology and innovation
  • Securing the energy future for India
  • Accelerated development of transport infrastructure
  • Rural transformation and sustained growth of agriculture
  • Managing urbanisation
  • Improved access to quality education
  • Better preventive and curative health car

"The idea is to make states think about changing things, doing things differently and also address design flaws," says the aide. Ministries and states will have to start with a zero base and rework troubled schemes such as ICDS. The approach paper to the Plan is expected to be released early this year. This redirection is the fifth or sixth such attempt since the 1980s.

Great ambitions
The Commission has readied a list of a dozen strategy challenges with feedback from 20 outside experts, ranging from Vijay Kelkar, Chairperson of the 13th Finance Commission, to Nitin Desai, former Under-Secretary-General for Economic and Social Affairs of the United Nations.

For the first time, the Commission has hired young professionals laterally to work on each of the 12 strategies. For the macro economy, Pranjal Bhandari, a former economist with Goldman Sachs Hong Kong, is working with Ahluwalia. Harsh Shrivastava, a product of the Indian Institute of Management, Ahmedabad, is assisting Maira on overall strategy. The Commission plans to use Twitter and Facebook to generate feedback.

The consensus amongst the youngsters and the experts, Maira says, is that India needs planning more than ever before, but it has to be done differently or else the Commission might as well shut down. Says Ahluwalia: "As against the planning that required us to set targets for even the number of scooters to be produced, our role will be to create an environment in which the economy can grow." The new way will not spell out how this environment is to be created; the Commission's reports already do that. But these reports are gathering dust. The idea now is to ensure that the implementation machinery buys into them for devising strategies - an uphill task, to put it mildly.

Oh! The Politics of It All!
The first big hurdle ahead of the Commission: clashes over ideology and politics. Take the corporatisation of Indian Railways, championed by it. Instead of responding with a howto-do-it solution, railway minister Mamata Banerjee is more likely to send a "No, Thank You" note.

Bihar Chief Minister Nitish Kumar

You decide the number of BPL families and give allocations…How is it possible for us to function in such a situation?
Nitish Kumar, Chief Minister, Bihar
In such cases, with or without reinvention, the Commission will have to continue to wait for the political environment to turn conducive or an authority figure to intervene. It does not help that Ahluwalia is not a favourite of political leaders. Even so, some states are coming to the Commission for solutions to specific problems. "Chief Minister Nitish Kumar in Bihar and Narendra Modi in Gujarat do pose problems to us and seek solutions," says Maira. Even here, the Commission has to walk a tight-rope: the solution has to be effective and politically acceptable.

Take the headcount of families living below the poverty line, or BPL, in Bihar. The state's tally is double that of the Commission. This causes problems when it comes to allocations. In November 2009, Ahluwalia visited the state for the first time since 2004 in his official capacity. At a seminar on poverty alleviation, Kumar rubbed in the disconnect: "You are the Deputy Chairman of the Planning Commission and your little blessing will be of great help…. You say there are 72 lakh BPL families, our survey says there are 1.5 crore."

Kumar asked Ahluwalia: "Is it possible to delete the names of families from our survey list? You decide the number of BPL families and give allocation accordingly. How is it possible for any state government to function? Bihar is not alone." Then, though the government allows the Commission to influence government schemes - in infrastructure, poverty alleviation and even policy - most ministers resent it as a bunch of nosey armchair advisors.

In 2009, roads and highways minister Kamal Nath, agitated over the Commission's insistence on standards for awarding contracts, had told BT: "You can have a view, but accountability rests with my ministry…Parliament questions me...not the Planning Commission."

The Commission also attracts ire for linking the release of funds to the readiness of the recipient to adopt reforms. This system devalued its advice considerably in the eyes of the states. "In effect, the current system implies: I give you money, you do this," says Maira. This is in contrast to the world of private sector consultancy that Maira left in 2009: clients value your advice so much that you are paid top dollar.

"We have to transform the panel into a set of thought leaders, coaches and guides that the states would want to consult," he says. "States have to be our clients." Ahluwalia has some things going for him in his ambitious undertaking. For one, he has the unflinching support of Prime Minister Manmohan Singh, a fellow economist.

Also, the economy is poised for a nine per cent growth, and there is new worldwide acceptance of planning given the realisation that markets do not always correct themselves on their own. This is perhaps why he has had the confidence to declare that, being the only Deputy Chairperson of the Commission to get two consecutive terms, he would have no excuse if the 12th Plan does not redefine the planning process. If Ahluwalia does succeed, the 12th Plan could become India's most important acceleration plan. For now, the Commission and its heritage seem to be exactly what they are now: forgettable.

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