It is difficult to support the cause of Planning Commission in these times. But it is important to have people on both sides of the debate.
Prof. Prabhat Patnaik of JNU in his typical style argues why the Planning Commission must continue. Infact it needs to be redefined to fight the neo-liberal capitalism we are facing.
The National Democratic Alliance government is reported to be considering an end to the Planning Commission. Whether or not this actually happens, we are likely to see a further enfeeblement of the Planning Commission, a process that has been going on for quite some time.
Why should there have been such a process of enfeeblement at all? Some would answer this question by asserting that a Planning Commission simply cannot have any role in a neo-liberal regime. The country has moved away from the “Nehru-Mahalanobis strategy”1 which visualised substantial public investment, and hence the need for a “plan” to effect such investment. With the public sector displaced from its leading role, any particular “public” engagement in development projects that may still be required in a neo-liberal regime (through public-private partnerships for instance) can be planned and executed by the concerned departments. There is no longer any role for an overarching body like the Planning Commission.
But this is not a compelling argument. There can still be a role for a Planning Commission even under the new dispensation, but a role different from the one it had earlier. This new role can be to provide a counterpoint to neo-liberalism. Paraphrasing Bertolt Brecht’s famous line: “In the dark times will there also be singing? Yes, there will also be singing about the dark times”, one can say: “Can there also be planning in the neo-liberal times? Yes, there can also be planning for coping with the neo-liberal times”.
In other words, even a government that lacks the will to take the country out of the vortex of globalisation, and hence willy-nilly has to pursue a basically neo-liberal policy trajectory can still have a national planning body that provides a counterpoint to neo-liberalism. Such a Planning Commission can be concerned with working out ways of preserving what remains of the public sector, with preventing the decimation of peasants and traditional petty producers that neo-liberalism brings in its wake, and with providing amelioration, by formulating welfare schemes, against the immiserisation of the people through inflation and unemployment.
He says Planning Commission stopped being the agency for development and just pushed the neo-liberal agenda as done by other agencies. He also takes on India’s elite econ policymakers:
Such a full-fledged neo-liberal state is characterised not just by a set of policies that fall under the rubric of neo-liberalism. It has a set of specific institutional features as well. These include: the “autonomy” of the central bank; the elevation of the Ministry of Finance to the status of a super ministry dominating all others; the manning of the central bank and of the finance ministry by ex-employees of the International Monetary Fund (IMF) and the World Bank, or of certain other global financial institutions (who usually go back to their parent bodies at the end of their tenures with the government); the organisation of training programmes for the bureaucracy, especially of the home-grown segment of the financial bureaucracy, by these multinational institutions or by universities in the metropolis acting on their behalf; and a general increase in the power of the bureaucracy over the elected political representatives of the people on the grounds that the latter are corrupt and cannot be trusted with key economic decision-making (which is often enough true, except that the “corruption” itself is usually a consequence of the privatisation spree unleashed by the neo-liberal regime, and tacitly acquiesced in by the very members of the global financial community manning the government, who then use it to discredit the “politicians”).
The transition from a postcolonial Nehruvian state to a neo-liberal state is not easy to effect within a political framework characterised by universal adult franchise. But the problem of negotiating such a transition is typically sought to be resolved through at least two means. One is the insulation of economic decision-making from the domain of politics, so that no matter who comes to power the same policies continue to be pursued in the realm of the economy.
This insulation is achieved partly by putting in institutional arrangements of the sort I mentioned above, which shift decision-making from elected political representatives of the people to employees and ex-employees of the World Bank, IMF, and other global financial institutions. And it is achieved partly by the need to ensure that capital does not fly away from the economy in question: if the nation state confronting globalised capital pursues economic policies – such as expansionary fiscal policies – which are different from those demanded by such capital, then it runs the risk of exposing the economy to debilitating capital flight, which can erode in no time the political support base of the ruling government; this serves to prevent any bourgeois political formation from nurturing ambitions of having an economic agenda of its own which is at variance with what is demanded by globalised capital. The possibility of a relatively autonomous nation state negotiating with globalised capital via a Planning Commission under these circumstances (when the economy is not delinked from globalisation through restrictions on cross-border movements of goods and capital) is then snuffed out.
Given the policy failures of IMF in multiple countries, one is not sure why we care so much for its trained economists. If we question Planning Commission, shouldn’t we question IMF’s role as well? But then anything goes as long as certain mainstream agendas are promoted.
It is not surprising that the process of enfeeblement of the Planning Commission, which is apparently reaching a denouement now, began long ago, when the Planning Commission, instead of being assigned the role of providing a counterpoint to neo-liberalism, was simply made into an instrument for promoting neo-liberalism.
Over the decade of the 1990s we find a bizarre phenomenon: while the tax-gross state domestic product (GSDPN) ratio of the states was higher than that of the centre on average, and even held up well, the states were caught in a debt trap at the end of the decade, which was then used by successive Finance Commissions, at the behest of the centre, to force “neo-liberal reforms” upon them. (This was a blatantly unconstitutional course for Finance Commissions to follow, against which Amaresh Bagchi, a member of the Eleventh Finance Commission, had given a dissenting note.)
An extremely important reason why the states got into a debt-trap was the high interest rates charged by the centre on the loans it made to them, rates whose weighted average for individual states exceeded in many cases the nominal growth rate of that state’s GSDP (which was a recipe for a debt-trap). And the rates charged on central plan assistance to states, instead of breaking this high-interest-rate regime, contributed to it. The Planning Commission in short was used as an instrument for making the states fall in line behind neo-liberal policies.
When the United Progressive Alliance (UPA)-I came to power, corresponding to the duality of thinking within the ruling circle, there was a peculiar duality that developed in the realm of institutions: while the Planning Commission continued to be used for promoting the neo-liberal agenda (through its insistence, for instance, on public-private partnerships), an altogether different body was created in the form of the National Advisory Council to formulate welfare programmes. True, the Planning Commission during this period, when Left support was needed to prop up the government, did have a diversity within it, which prevented its complete collapse into neo-liberalism, and gave rise to some striking initiatives like the Rashtriya Krishi Vikas Yojana; but with UPA-II little space remained for such initiatives and the process of enfeeblement gathered momentum.
Does the argument which I have been putting forward, namely, that a process of enfeeblement of the Planning Commission is embedded within the unfolding political economy of a neo-liberal regime, imply that it is an inevitable phenomenon? This question is both pertinent and topical at this moment. There is currently a debate among progressive economists in the United States (US) on whether increasing income and wealth inequality among people is a matter of pursuing particular policies or whether it expresses an immanent tendency of capitalism.
I think there is a need for a broader debate on the role of certain institutions. We have seen the whole world turn around in the last 5-6 years. One cannot say that planning kind of institutions alone have failed. The market savvy ones have failed and miserably too. We forget that by doing away with Planning Commission kind of places on the basis of them being too centralised, we make the finance ministry even more centralised. We need some distribution of powers. And who knows just like UPA created NAC for the role of Planning Commission, current govt might created another planning commission kind of agency.
Much of policy work too goes around in circles..