In 2009, Manmohan Singh returned as the Prime Minister of India (also Chairman of the Planning Commission) — this time, without the support of the Left parties. At the time, the clamour to reform the Planning Commission had become very loud. The government’s opponents, as well as its supporters, were unhappy with the Planning Commission: Chief ministers from diverse political parties, leaders of businesses and civil society organisations, and the government’s own ministries, all complained.
The Planning Commission’s domain experts in fields like agriculture, industry, and urban development published detailed plans every five years, supported with volumes of data. Though GDP growth rates were increasing, gaps between the Plans’ goals of “faster, and more inclusive and more sustainable growth," and results on the ground, were becoming larger with every plan cycle, especially with regard to inclusion and environmental sustainability.
All institutions must evolve and adapt with changes in the world around them. India had changed substantially since the Planning Commission was formed in 1950. For many years, one political party, the Congress, had ruled at the Centre and in the states. Its hegemony was broken in the 1990s. An era of coalition governments began at the Centre, and many states saw regional parties come to power.
With the economic liberalisation in 1991, the private sector was released from government control. With these fundamental changes in the structure of the economy and politics, the Indian ship of state became a flotilla of boats, each with its own crew, that had to be induced to follow the same plan for the country without a Centre dictating terms.
Top-down control, with 'one-size-fits-all' national schemes, the paradigm of planning followed until then, would not work in the new political and economic realities. What the country needed was a Centre acting like a radar, providing a map of the weather to all states and enterprises, so they could sense what is going on in the wider world around to prepare for all that will cross their individually chosen paths.
Manmohan Singh summarised the requirements for transforming the Planning Commission to make it an effective catalyst in a large, diverse, entrepreneurial and democratic country.
Transformative changes would be required in the ways the Planning Commission worked, and in the outlooks and skills of its members.
The Planning Commission’s staff had power over the rest of the government and the states. Yet, according to the states and ministries, the Commission was not backed by requisite knowledge. Chief ministers of faster-progressing states resented this attitude of the Planning Commission.
How the Planning Commission would need to transform is not with regard to more domain expertise or greater budgetary powers. It would have to become a learning organisation and be able to help states and ministries to also learn.
The writing on the wall was before the Planning Commission. However, it is always difficult for old institutions to unlearn the ways they mastered in the past, and for their leaders to step off the societal pedestals their institutional positions have put them on.
Narendra Modi, then Chief Minister of Gujarat, was one of the fiercest critics of the Planning Commission. The first major reform he announced as Prime Minister, in his address to the nation from the Red Fort on August 15, 2014, was the disbanding of the Planning Commission.
When Modi announced the charter of a new institution, the Niti Aayog, to replace the Planning Commission on January 1, 2015, I was invited as the first expert witness by the Joint Parliamentary Committee on Finance and Planning. The Left and Right, government and opposition, were represented on the Committee, which was chaired by a Congress leader.
They asked me to explain what reforms of the Planning Commission had been found necessary, and why. When I presented what we had learned from stakeholders, and outlined the reforms deemed necessary, all on the Committee agreed they were essential. They asked me whether the new Niti Aayog would fulfil the requirements. To the surprise of many on the Committee, the charter of the Niti Aayog matched up to the requirements.
New institution
The objectives of the new institution were: “…to evolve a shared vision of national development priorities with the active participation of states….to foster cooperative federalism….encourage partnerships between key stakeholders…offer a platform for resolution of inter-sectoral issues…develop mechanisms to formulate credible plans at the village level…”. Clearly, the Niti Aayog was to be a catalyst and facilitator, not a controller.
The new institution would not have any financial powers. In fact, a high-level independent committee commissioned by the erstwhile Planning Commission had already recommended that the Commission should be stripped of these powers. Therefore, the new charter announced by Modi was consistent with the vision of Manmohan Singh.
Would Niti Aayog perform as expected? That would depend on whether the government would merely replace the economists and planners in charge with their own loyalists and then dictate its own agenda through them, or whether it would be bold enough to put leaders at its helm with the orientation and skills required.
The Niti Aayog has implemented the federal, facilitative spirit of its charter in many ways. It promoted the 'ease of doing business' framework as a way for states to compare their progress with each other, and for the best performer to be recognised.
Learning in action
The Aayog's unique role is essential wherever systems change must be brought about. Furthermore, the 'ease of doing business' framework requires all-round improvements in administration and infrastructure. National health and education plans, wherever required, are the responsibilities of the respective ministries, but the Aayog must help them align their plans with other sectors, across government silos.
Institutional reform is a process of learning in action — of redesigning an aeroplane mid-flight. The Niti Aayog must learn and change faster to fulfil its catalytic role. It does not need more experts with domain knowledge, nor more budgetary powers.
Evidence from around the world reveals that theories of liberal economics that have spread around the world since the 1990s harm inclusive and sustainable development. Experts in economics do not have the knowledge required to understand complex socio-ecological systems.
In order to guide a flotilla of boats democratically, the leaders must be good systems thinkers. Also, they must be very good listeners to people who have different views, so that they can all learn together and persuade each other.
(Arun Maira was a member of the Planning Commission and has authored 'An Upstart in Government: Journeys of Change and Learning')