India Buries Central Planning
Many institutions of the Indian state trace their origins to the mid-20th century. The constitution of India was adopted in 1950, and -- at a time when communism's vision of comprehensive state power enjoyed wide intellectual currency -- the bodies that would implement the new republic's vision of the role of the central government and economic management were created then, too.
Two weeks ago, at his inaugural Independence Day speech at New Delhi's Red Fort, India's Prime Minister Narendra Modi (himself born in 1950) sounded the death knell for one such organization. He announced that India's Planning Commission, the body instituted to conceptualize the grand overarching strategy of Indian economic policy in 1950 by India's first prime minister, Jawaharlal Nehru, would be disbanded and replaced by a five-member think tank.
The life of this mysterious and venerable institution, whose name today signifies the intellectual oppression of a class of distant elites rather than the mid-20th-century romance of "central planning", was in one stroke terminated. The prime minister, a superb orator (he is scheduled to give a public address at Madison Square Garden in New York in the last week of September) and equally impressive maker of homespun metaphors, said to the nation:
Sometimes, it becomes necessary to repair a house. It costs a lot of money but it does not give us satisfaction. Then, we feel it is better to make a new house. We will very soon set up a new institution in place of the Planning Commission.
Modi's thinking suggests that he recognizes the continuing need for a body outside the Finance Ministry to contemplate the long-term needs of Indian economic policy, but considers the Planning Commission the product of an outdated economic ideology. After all, when the Commission was formed, the government resolution began with the sentence, "For some years past, the people of India have been conscious of the importance of planned development as a means of raising the country's standard of living."
The resolution envisaged the Planning Commission as "an organization free from the burden of the day-to-day administration, but in constant touch with the Government at the highest policy level." For a couple of decades, under Nehru's stewardship, this was exactly the role the Commission played, preparing the comprehensive "Five-Year Plans" that projected the Indian state as an intrepid boatman guiding the rickety economy through the currents of poverty and capital scarcity and away from the rocks of private-sector perfidy.
Then, the Planning Commission reigned supreme in a world where, as Stuart Corbridge writes, "the state would specify a social welfare function for the future and then devise the best economic and statistical instruments to match inputs to outputs." In the best of the obituaries of the Planning Commission, the sociologist Shiv Visvanathan called it a monument to "the dream of linking knowledge and power to serve society."
Over the decades, as the chinks in the economic ideology of the early Indian republic, and the idea of socialism in general, were revealed, the Commission began to decline in power and influence, though it remained an important arbiter in the disbursement of central funds to the states. With the liberalization of the Indian economy in 1991, the Planning Commission's remit became much smaller, though the five-year plans continued to flow. In the past decade, its main role was as an interpreter of economic data, an employment hub for economists, and the publisher of vague and windy documents such as "Scenarios: Shaping India's Future." As a brief history on the Commission's website put it, covering a span of 45 years in a single sentence:
For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature.
An unflattering gloss on that last phrase might be dredged out of a 2012 report in the Economist, which described the current role of the Commission as one of "whispering in important ears" and "being heard but politely ignored." Modi's Independence Day speech revealed that the prime minister felt that the Planning Commission's hoary past and substantial workforce would be an impediment in making it a new entity for a new time. Best to junk it and begin afresh.
But if the word in New Delhi's policy circles is anything to go by, the new research organization envisaged by the prime minister will have a clunkier name than the body it supplants. It will likely be called the National Development and Reforms Commission, in the manner of a similarly named state body in China. The word "planning" had a certain precise meaning and remit, whatever the weaknesses of the concept itself; "development" and "reforms" are much more opaque.
Perhaps the new commission will deliver to Indian economic policy a blueprint for Modi's specific emphases -- the need to make India a bigger power in manufacturing; the allocation of resources for big infrastructure projects such as planned cities and high-speed trains. But in the long run, the new body might be perceived as the brainchild specifically of Modi, as the Planning Commission was of Nehru -- and therefore liable to be knocked down yet again by his successor.
Will we be talking about the strategic work of India's NDRF fifty years from now? My money wouldn't be on it -- but perhaps even the words "development" and "reform" might have been discredited by then, as "planning" is now. For the moment, though, India's prime minister has laid the wreath upon one of the major institutions of Indian economic history, one inaugurated in the conviction that economics was less private enterprise than state planning.
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