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Yojana Bhawan Obiter Dictum
Yojana Bhawan Obiter Dictum
Yojana Bhawan Obiter Dictum
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1 Introduction
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on the one hand and from a closed economy to an open one beginning 1991.
The objectives of the Indian Planning
Commission were clearly enunciated in
the 1950s government resolution of its
(Commissions) establishment. Apart from
the original seven functions, there was
also a growing list of evolving functions. Broadly speaking over the four
decades 1950-90, the Planning Commission engaged in the following five main
functions:
(i) Drawing out a road map for the longterm vision of the economy (perspective
planning).
(ii) Ensuring the maintenance of intersectoral balances via the use of inputoutput tables (in many respects an intellectual descendant of the Soviet material
balances of the 1920s constructed by
Groman and Bozarov). As discussed below
there was a marked retreat from the
idea of balances beginning the Eleventh
Five-Year Plan. In the manner of its actual
operation, in contrast to the Gosplan
approach of striving for material balance
at the most detailed micro level, the
Indian Planning Commission confined
itself to a broad macro-balance sheet of
sources and uses of physical capital and
intermediate goods. There was also a
(most rudimentary) exercise to match the
demand and supply of financial capital.
(iii) Determining (in consultation with
the states through the forum of the
National Development Council) and
overseeing the interstate disbursal of
public investment with a view to reconciling conflicting demands naturally
arising in a federation.
(iv) Acting as an informal forum for
inter-ministerial coordination over contentious issues (especially in the defence,
environment and external sectors).
(v) Informally, the Planning Commission
has also acted as a consultancy wing for
various government ministries.
A detailed evaluation of the success
(or otherwise) of the planning experiment during these four decades cannot
be attempted here. Broadly speaking the
major areas of failure were (i) a national
growth rate much lower than achieved
in the South East region generally and
China in particular, (ii) a failure to make
a significant dent on poverty, (iii) growing
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(which should be given an added mandate of allocating funds for development needs of the states), and (iii) the
task of project evaluation could be
entrusted to the respective ministries.
The National Development Council, would
continue to play its current role in the
envisaged scenario.
8 Three Alternatives
The first of the above views is not exactly as arcane as some of the more vocal
critics of the planning concept are likely
to make out. Even in the kind of market
economy that we seem to be hurtling
towards, the role of the state would
continue to be important and perhaps
increasingly so.
(1) First, as pointed out by Groenewegen
(1994), government intervention in
markets can promote innovation, market
competition, cooperation and contestability (the theory of doubly organised
markets).
(2) Second, industrialisation implies a
growing importance of public goods and
(even more important) public services
(Lewbel 2006). In view of the pronounced externalities associated with
such goods, their distribution cannot be
left to market forces but has to be taken
over by the state (irrespective of whether
such goods and services are actually
produced in the public or private sphere).
(3) The increasing importance of projects
spanning multiple states (such as power
grids or national waterways) necessitates
a mechanism for interstate operational
coordination of investments. Since such
projects also involve inter-ministerial
issues, they cannot be left to individual
ministries. Nor is it feasible to burden
the Finance Commission with this task,
unless its current structure is made
much more elaborate (in which case it
would simply be the old Planning Commission under a new appellation).
(4) Finally, issues like poverty alleviation,
income inequality, welfare of deprived
sections, positive discrimination and
general social welfare cannot be left to
purely private initiatives or civil society
organisations (CSOs).
(5) Finally, it may surprise many to find
out that general government expenditure
as a percentage of GDP (average for
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