Surface transport minister Kamal Nath has questioned the need for the Planning Commission by calling its members ‘armchair advisors’. The Planning Commission was in overall command of the economy after Independence. Nehru had envisioned state control of the economy. He was much impressed by the Russian experience.
The western countries had developed much by embracing the free market economy in the last 150 years. But Russia had attained almost the same level in a short span of 30 years under a public sector-led model. The Planning Commission in our country was to replicate the Russian success. Thus Union ministers and chief ministers regularly trooped into the commission’s offices to seek approval of their proposed plans and schemes.
Times have changed. The Russian model has collapsed. The market reigns supreme across the globe. It is, therefore, suggested that there is no need for the Planning Commission any more. Ministers should be left free to run their ministries without unnecessary meddling by the commission. Indeed, the old role of the Planning Commission is no longer relevant. But there still is a critical role for it. This can be understood by an example. Previously, the telecommunications system of the country was wholly in the hands of the Post and Telegraphs Department which made an assessment of the country’s needs, established telephone exchanges and fixed the tariffs. Nowadays these functions are being performed by private players. But the role of the government has not been extinguished. In fact, the private players are delivering because the government is guiding them properly. The Telecom Regulatory Authority (TRAI) fixes inter-connectivity charges and structure of tariffs, makes rules for sharing of towers, etc. The rapid expansion of mobile telephony in the country owes itself to the direction given by TRAI. The role of government has not come to an end. Only its form has changed.
Former chief economist of the International Monetary Fund Raghuram Rajan has come to the same conclusion. He has undertaken a study of the civil aviation sector in the United States. Previously only one airline company ‘Pan Am’ dominated the skies. Then the regulators stepped in. They made rules for the sharing of ground infrastructure and other such facilities. Result was that small airline companies got a chance to enter the scene. A fierce rate war ensued. In due time, the old and inefficient megalith Pan Am had to close shop while new lean companies flourished in the more competitive world. These examples indicate that the market delivers only when regulated in the right direction.
Ministries also need to be given direction in keeping with the overall situation of the economy. Take, for example, the surface transport ministry. Left alone, the ministry may like to make four-lane highways in every district headquarters. This may even be profitable for the construction companies but not necessarily for the country. Large tracts of agricultural land will be acquired for making the highways. This will hit our food security. Use of land for non-agricultural purposes has become a major issue in the US nowadays. Secondly, four-lane highways will be used mainly by private cars. A two-lane highway is sufficient for public transport. Thirdly, our economic power will be devoted to making cars. Other critical sectors like health, research and housing will be adversely affected. Fourthly, the ministry of finance may impose a high tax on private cars.
This will reduce the use of private cars and there may not remain many toll payers. Fifthly, the railway ministry may make high speed bullet trains. That will again make the highways less useful. Sixthly, it is reported that Americans are developing certain diseases due to long hours spent sitting in cars. The Planning Commission should look into these various interrelations and make a perspective plan for the transport sector.
The Planning Commission must take an overall view and guide the ministries. The prime minister is the chairman of the Planning Commission. Deputy Chairman of the Commission Montek Singh Ahluwalia has acknowledged the need for the Planning Commission to move to ‘indicative planning’. This resolve is in the right direction.
There is need for fresh perspectives in the commission. Air-conditioned shopping malls are coming up in the cities while poor weavers and blacksmiths in the villages are losing their livelihood. Productive activities of farmers and industrialists are facing labour shortages while labour power is being wasted in fictitious works under the Employment Guarantee Scheme. Car congestion in cities has increased such that it is taking thrice the time to reach one’s destination. Wealth of the developing countries is being transferred to the developed countries under the lop-sided patents regime. The Planning Commission is singularly obsessed with achieving 10 per cent growth rate.
This unfortunate situation has developed because the commission is manned mostly by retired bureaucrats who are responsible for creating these problems in the first place. The commission churns out the same old formulae which are destined to fail.
The role of the commission is to make a perspective plan and coordinate policies of various ministries. But filling up the commission with bureaucrats kills the very purpose of brainstorming with new perspectives and coming up with creative solutions. Need of the hour is not to disband the commission but to infuse fresh ideas.
bharatj@sancharnet.in