Come 2015, the Planning Commission will be replaced by a new panel. But before setting up a new body the Centre must be get rid of the flaws in the existing one and also be clear on what it wants from the new panel.
The existing Planning Commission has barely managed to perform the function of collecting best practices in policy or programme designs from states and replicating them in other states. The new panel must ensure such replication and to incentivise it, a major financial allocation function must be vested in it.
The current five-year plans are rightly criticised for not being used for monitoring outputs. The new institution can lay down outputs/outcomes as performance criteria for states, the flexibility that is so desired by the states on how to spend the funds would still be consistent with achieving outputs. Funds allocated for next year should depend upon results achieved. That in turn requires data on outputs being free of bias and timely. This is another function that the new body should supervise.
In contrast to China, India remains one of the most fiscally centralised federal systems in the world. The one-size-fits-all design of centrally-sponsored schemes (CSSs) is a source of resentment among states. Unfortunately, we have a fiscally centralised centre on the one hand, and a Planning Commission that promoted one-size-fits-all CSSs. The new panel should change the latter, and the finance commission and the Centre should work towards changing the former.
Historically, programmes here have been devised with ‘top down’ designs where the Centre provides funds and the states implement. The new panel must conduct pilot programmes using alternative design elements before they are rolled out at a national level, like the Chinese do.
Five-year plans should continue but they must be backed by monitorable targets for annual plans, which are the subject of Centre-state annual plan discussions. Big infrastructure projects were stuck under the previous government because states failed to provide approvals. The new body must ensure the approval of projects of national importance through a process of consultation with states, which requires domain expertise.
There is also a need for a strategic plan coordination function first at the Centre, and then with states. National priorities are currently spread across different central line ministries, causing great dysfunctionality.
Cooperative federalism with states can only become effective if central ministries coordinate among themselves. For example, energy policy requires active coordination across the ministries of petroleum, chemicals/fertilisers, and coal. Education and skill development requires policy/programme coherence across 21 line ministries. Merely creating committees of secretaries across line ministries will not ensure coordination.
But none of these critical functions to achieve ‘maximal governance’ are conceivable without sectoral expertise in the reformed commission. The Planning Commission is staffed by generalist IAS and IES officers. Simply networking with other think-tanks will not suffice; it needs experts to recognise the expertise available outside. A widespread programme of lateral entries at different levels would have to be encouraged. Having a ‘background’ or ‘experience’ in these areas, as many senior bureaucrats do, will not be enough.
Santosh Mehrotra is professor of economics, Jawaharlal Nehru University, and headed the research institute of the Planning Commission.
(The views expressed by the author are personal)