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3. Highly Centralised Nature of Planning
Decentralising the process of planning has been a major goal of the governments since the 1950s. But after Nehru, with every Plan we see greater
tendency of centralisation in the planning process. Setting up of the NDC and promoting multi-level planning (MLP) did not serve much purpose in this direction. It has been among the criticised areas of planning in India as the National Planning Committee as well as the First Plan itself had called for ‘democratic planning’ in the country.
By the mid-1980s, the mindset of the Centre went for a change and the need for decentralised planning got proper attention. Finally, by early 1990s two constitutional amendments (i.e., the 73rd and the 74th) promoted the cause of decentralised planning by delegating constitutional powers to the local bodies. With this, a new era of planning began, but still the planning of local bodies is in a nascent stage due to lack of proper financial provisions for them. Once the financial provisions for local bodies are evolved to the adequate level or the local bodies are given financial autonomy, the process of decentralised planning will surely get a new direction and meaning, as the experts believe.
In the meantime, the Tenth Plan emphasised greater role for the states in the planning process. The Plan started a concerted effort to include the states’ participation in the national planning process. The Centre is today more concerned about the developmental constraints of the states and is trying to adequately support the State Plans to the extent possible. In return, the Centre wants greater and transparent fiscal compliance from the states. This approach continued during the Eleventh Plan and so has been committed for the Twelfth Plan, too. After some time we may hope that this criticism of Indian planning will lose it’s ground.
It is high time now that the planning process of the nation tries including the mass participation. The Economic Survey 2011–12 rightly devotes a section to dwell into contracts and how the civil society and citizens play a key role in fostering economic growth. “Honesty, punctuality, the propensity to keep promises, the attitude towards corruption are matters shaped in great part by norms and social beliefs and the behaviour patterns can become habitual. Moreover, in a democracy like India, what can be done by government depends in great measure on how ordinary people think and what people believe in,” it says. The Survey further adds that the civil society has been campaigning to put in place new institutions, such as the Lokpal Act, to ensure the quality of service and bring about transparency through
steps such as auction of natural resources while the government has either been slow or resisted several changes.102
4. Lop-sided Employment Strategy
Planning in India has been tilted heavily in favour of ‘capital intensive’ industries, especially from the Second Plan onwards. Such industries in the public sector could not generate enough employment. In place of it India should have gone in for ‘labour-intensive’ industries. In the era of economic reforms, the attitude changed and the planning process is promoting the agriculture sector with an emphasis on agri-industries and agro-exports to create more gainful and quality employment opportunities. The earlier emphasis on ‘wage-employment’ has shifted towards ‘self-employment’ to do away with the lop-sided employment strategy of the past.
Indian planning emphasised on public sector undertakings (PSUs) for the right reasons, but in the wrong way and for a considerably longer period of time. The state’s monopolies in certain areas continued over such a long period that too in losses that there came a demand-supply gap in the major goods and services produced by the PSUs. Though very conducive policy changes were effected after the country started the reform processes, the hangover of the past is still looming large. Several reforms in the PSUs as well as a more liberal approach towards the private sector with market reforms are needed to phase out the discrepancies created by the over emphasis on PSUs.
6. Agriculture Overshadowed by the Industry
Promoting the cause of faster industrialisation over time became so dear to the planning process that the agriculture sector got badly over-shadowed. Though the Plans were highlighting or prioritising agriculture, the industrial sector and the PSUs were glorified in such a way that time and resources both were scarce for the agriculture sector. Such a policy always created a
situation of food insecurity (even today) for the country and the masses who depended upon agriculture for their livelihood and income (still it is 58.2 per cent)103 could never increase their purchasing power to a level that the economy could reverse the situation of ‘market failure’. In India, even today, industrial growth is badly dependent on agricultural growth.
The Tenth Plan recognises agriculture as the ‘core element’ of development. This is a welcome ideological change in the strategy of planning. Now the industries can sustain themselves, but the laggard agriculture sector needs some special care and promotion from the government, so that the masses who earn their livelihood from agriculture can benefit out of the WTO-promoted globalisation. The agriculture sector is in urgent need of attention, otherwise, the process of globalisation is going to be ineffective in benefitting the masses.
7. Faulty Industrial Location Policy
There are time-tested theories of ‘industrial location’ considering the nearness of raw materials, market, cheaper labour, better transportation and communication, etc. But the Plans always prioritised setting up of new industrial units (i.e., the PSUs) in the backward regions of the country, which falsify the theories of industrial location. The government needs to develop all industrial infrastructures besides setting up certain PSUs. As the PSUs require skilled labour force, the regions failed to gain any employment from the PSUs too. The government still continues with the same policy of setting up industries, but now the new PSUs are hardly set up in traditional areas.
Mobilising resources to support the highly capital-intensive Plans (courtsey the PSUs) has always been a challenge for the government. To support the Plans, no stones were left unturned namely, going for a highly complex and liberal tax structure, nationalising the banks, etc. Ultimately, tax evasion, the menace of parallel economy and lesser and lesser capital for the private sector were the bane of India. Expansion of subsidies, salaries and the interest burden every year gave an upward push to the non-plan expenditure leading
to scarcity of funds to support the plan expenditure (i.e., the developmental expenses).
In the era of reforms, the government has started giving attention to the financial strategy of supporting the Plans in the right way. Besides tax reforms, the financial reforms, as well as fiscal consolidation have been given proper care in recent years.