Commentary/Mani Shankar Aiyar

What the Indian economy needs is not planning but perspectives

When it was the role of the State to occupy the arrow-head of the industrial development process, it made sense to have the kind of detailed sector-wise modeling that informed our plans from Mahalanobis to Pranab Mukherjee. Now that we have decided to let the private and multinational sectors take over much of the responsibility for further industrial development, and increasingly for infrastructure development, it makes little sense, at least in this modernised segment of the economy, to first say that the market will determine the direction of the economy -- and then direct the economy to determine the direction of the market!

Yet, that is precisely what Yojana Bhavan proposes for the Ninth Plan. Could not Gowda have found someone a little younger, a little more with it, for the Planning Commission? This is like asking Mozart to write the score for a Michael Jackson concert!

The focus of planning must shift from fine-tuning sectors which -- and should -- take care of themselves to sectors which still cry out for state intervention: agriculture, rural development and diversification. Health, education, and, above all, the direct assault on poverty. (Perhaps also infrastructure, at least for just this one additional plan period, now that Manmohan has confessed in this regard his mea culpa.)

For what the modernised segment of the Indian economy now needs is not planning but perspectives. Any private sector manager needs a medium-term fix on macroeconomic parameters to work out what he should be planning for his enterprise in a micro-economic sense. It is this perspective that Yojana Bhavan should be providing, with frequent updates, imparting a high sense of confidence in the figures by increasingly sophisticated computer modelling in the Perspective Planning Division.

The key point to note here is that at any given time there will be a five-year perspective, not a single immutable perspective for blocks of five years, as at present. Every year -- at least -- the Planning Commission will crunch the numbers and tell India and the world what the coming five years will be like and, within that framework, what the next 12 months seem set to be.

In precisely the same way as planning inhibits the flow of private investment, both domestic and foreign, perspective planning of the kind suggested would do more for stimulating investment than any number of glossy come-hither pamphlets put out by either Chidambaram's outfit or Gujral's.

That will leave the rest of the Planning Commission free to concentrate on what it really should be doing -- improving the government's capacity to govern in areas crying out for improved governance -- which is the area roughly covered by the 700 million Indians who are outside the marketplace.

For the 200 million who are within, let the market take care of their needs -- the State has only to set up the goal-posts and level the playing field. But, for the rest -- the vast majority, their crippling disadvantage has been the State's inability to deliver to them their due.

We have now taken the first giant step towards securing for the poor a development delivery machinery which is in their own control: assured Panchayati Raj. What we have in place, however, is but the shell. The substance is yet to be poured in. No institution is better-positioned than the Planning Commission to micro-monitor the implementation of Panchayati Raj.

Poverty and hopelessly inadequate human resources development are the root causes of our failings. Both have been gravely aggravated by the almost total reliance on a bureaucratic machinery for the delivery of development. Development can come only through democracy at the grass roots. A Ninth Plan Approach which translates into the actual practices of governance; the provisions of the panchayats and nagarpalikas Constitutional amendments will do more for real growth rates than any number of computer simulations in Yojana Bhavan. For, hitherto, planning has been about capturing the commanding heights of the economy. It should now be about capturing the commanding heights of the polity.