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Economic planning was basically an element of the centralised kind of political system (i.e., the socialist and the communist). When India decided in favour of a planned economy it was to face double challenges:
(i) The first challenge was to realise the objectives of planning in a time- bound frame, and
(ii) Making economic planning a suitable instrument of development in the democratic set up—to democratise and decentralise the process of planning
itself.
The government tried to decentralise the planning process by setting up the NDC and promoting the MLP, but without being able to achieve the desired results. By the late 1980s, a direct link was established92 between development and democracy. And it was established that the above-given challenges were basically complementary—without solving the second challenge (i.e., decentralisation) the first challenge (i.e., development) cannot be solved. Finally, once the PRIs were given the constitutional status, first time planning became a constitutional excercise at any level, i.e., at the panchayat level.
Though the planning at the central and the state levels are still extra- constitutional activities, it has become constitutional at the level of local bodies. Kerala has shown some pathbreaking good works via local body planning.93 But still there are many hurdles to be solved before the local bodies are really able to plan for their proper development. These hurdles as per the experts are as under:
(i) The financial status of the PRIs is still not stabilised.
(ii) Which taxes the PRIs can impose are still not clear.
(iii) The state assemblies have been procrastinating in delegating timely and needful powers to the PRIs.
(iv) Low level of awareness among the local people regarding their Right to Information and the right functioning of the PRIs
(v) Use of money and muscle power in the PRI elections in some states
By mid-2002, there took place an all India Panchayat Adhyaksha Sammelan in New Delhi. At the end of the conference , the Panchayat Adhyakshas handed over a ‘21 Point Memorandum’ to the government which specially dealt with the financial status of the PRIs. In July 2002, while the then PM was addressing the annual meet of the District Rural Development Agency (DRDA), he announced that the PRIs will be given ‘financial autonomy’ very soon. He further added that once there is a political consensus, the government might go in for further constitutional amendment. Unfortunately, the same coalition (i.e., the NDA) did not come to power in the forthcoming general elections. But the UPA Government did not look less serious on the issue of participatory development. By mid-2006, the Planning Commission wrote letters to every Chief Minister of each state that before the Eleventh Plan commences it wants that all the PRIs are duly delegated their functional powers of planning from the concerned states. Otherwise, the funds kept for local development would not flow to the states. This shows the seriousness of the Central Government.
Meanwhile, the Central government is aimed at redrawing the contours of decentralised planning in the country. The new development ‘think tank’—NITI Aayog—has a completely new orientation towards decentralised planning:
• The body has to design the development policies keeping in mind the needs of nation, states and the PRIs. This will be one of its kind—a fully ‘integrated’ planning process.
• It has to use the ‘bottom-up’ approach unlike the one-size-fits-all (‘Top- down’) approach of the past.
• To the extent the finalisation of plans and required funds are concerned,
all stakeholders will be having their says (through the Governing Council which is composed of the CMs of states and the Chiefs of UTs).
• Promoting the idea of ‘Team India’ which will be working on a common ‘National Agenda’.
• It has to promote the idea of co-operative federalism, which is in itself a highly decentralised style of promoting development planning.
By early 2015, we saw a change in the Central government’s outlook towards the fund requirements by the states, viz.,
(i) States now get 42 per cent share in the pool of taxes of the Centre (recommendation of the Fourteenth Finance Commission accepted).
(ii) States are getting liberal funding (loan plus grants) from the Centre to implement the State Plans.
(iii) One of the aims behind implementing the proposed GST is to the enhance the internal financial capacity of the states as the new tax will increase the gross tax collections of the states.
(iv) States are now free to go for higher market borrowings without any permission from the Centre (but such a move has to come from the Centre). The UDAY (Ujwal Discom Assurance Yojana), launched in 2015–16 is one of such approvals of the Central government under which states are allowed to issue ‘UDAY Bonds’ up to 75 per cent of the dues of the electricity distribution companies (Discom) of the states (by mid-2016, the total discom debt in the country amounted to Rs. 4.3 lakh crore).