Indian Economy, 5th edition (17 page)

Fourth Strata: The Block Level Planning

As a part of the district level planning the Block level Planning came up which had the District Planning Boards as their nodal body of planning. Below the Blocks, India developed the planning at the local level, too.

Fifth Strata: The Local Level Planning

By the early 1980s, plans were being implemented at the Local Level via the Blocks and had the District Planning Boards (DPBs) as the nodal agency. Due to socio-economic differentiations among the population, Local Level Planning in India developed with its three variants,
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namely–

(i)
Village Level Planning

(ii)
Hill Area Planning

(iii)
Tribal Area Planning

Basically, the MLP was started to promote the process of decentralised planning in the country. It was the Indian version of democratic planning which ultimately sought to guarantee the people’s participation in the process of planning. But it failed to do so due to many reasons. The reasons have been discussed below:

(i)
It could not promote people’s participation in the formation of the various plans. The basic idea of the MLP model was that once the local level plans will be handed over to the blocks, the blocks will make their plans and once the blocks hand over their plans to the districts, the district level plans will be formulated. Similarly, the state plans and finally the Five-Year Plan if the Centre will formulate one. By doing so, every idea of planning will have the representation of everybody in the country at the time of plan formation—a special kind of plan empathy would have developed out of this process. But this was not the reality. Every strata made their own plans—lacking the empathy factor.

(ii)
Only
c
entral Plans were implemented as the states lacked the required level of the finance to support their plans. They ultimately had to be satisfied by implementing the Central Plans which failed to include the states’ empathy.

(iii)
As the Local Bodies in India were not having any constitutional mandate, they just played the complementary roles to the state Planning process. As they had no financial independence, their plans, even if they were formulated, remained on paper only.

(iv)
The MLP, thus, failed to include the people’s participation in planning, badly betraying the local aspirations.
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But at least the failure of the MLP made the Government to think in the direction of decentralised planning afresh leading to the enactment of the two important Constitutional Amendments–the 73
rd
and the 74
th
.

WAY TO DECENTRALISED PLANNING

Economic planning was basically an element of the centralised kind of political system (i.e. the socialist and the communist). When India decided in favour of planned economy it was to face double challenge:

(i)
First challenge was to realise the objectives of planning in a time-bound frame and

(ii)
Making economic planning a suitable instrument of development in the democratic set up was the other challenge—to democratise and decentralise the process of planning itself.

The Government tried to decentralise the planning process by setting up the NDC and promoting the MLP but without being able to achieve the desired results. By the late 1980s, a direct link was established
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between development and democracy. And it was established that the above-given challenges were basically complementary—without solving the second challenge (i.e. decentralisation) the first challenge (i.e. development) cannot be solved. Finally, once the PRIs were given the constitutional status first time planning became a constitutional excercise at any level i.e. at the panchayat level.

Though the planning at the central and the state levels are still extra-constitutional activities, it has become constitutional at the local bodies level. Kerala has shown some pathbreaking good works via local body planning.
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But still there are many hurdles to be solved before the local bodies are really able to plan for their proper development. These hurdles as per the experts are as under:

(i)
The financial status of the PRIs is still not stabilised.

(ii)
Which taxes the PRIs can impose are still not clear

(iii)
The state Assemblies have been procrastinating in delegating timely and needful powers to the PRIs.

(iv)
Low level of awareness among the local people regarding their Right to Information and the right functioning of the PRIs

(v)
Use of money and muscle power in the PRI elections in some states

By mid-2002, there took place an all India Panchayat Adhyaksha Sammelan in New Delhi. At the end off the meet, the Panchayat Adhyakshs handed over ‘21 Point Memorandum’ to the Government which specially dealt with the financial status of the PRIs. In July 2002, while the then PM was addressing the annual meet of the District Rural Development Agency (DRDA), he announced that the PRIs will be given ‘financial autonomy’ very soon. He further added that once there is a political consensus, the Government might go in for a further constitutional Amendment. Unfortunately, the same coalition (i.e. the NDA) did not come to power in the forthcoming General Elections. But the UPA Government does not look less serious on the issue of participatory development. By mid-2006, the Planning Commission wrote letters to every
c
hief Minister of each state that before the Eleventh Plan commences it wants that all the PRIs are duly delegated their functional powers of planning from the concerned states. Otherwise, the funds kept for local development would not flow to the states. This shows the seriousness of the Central Government.

Once there is a right level of awareness among the local people and the PRIs are able to take their real shape, the planning process will get decentralised, we may be sure of that.

THE PLANNING COMMISSION & THE
FINANCE COMMISSION

Federal political systems provide independent financial control to the central as well as the state Governments so that they are able to perform their exclusive functions.
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For the same objective, the Constitution of India has made elaborate provisions
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i.e. setting up of a Finance Commission to recommend to the President certain measures relating to the distribution of financial resources between the Union and the States. But the powers given to the Finance Commission by the Parliament limited its functions to the extent of finding out revenue gap of the states besides recommending for the ‘grant-in-aids, to the states from the centre. The finance commission cannot determine the capital-related issues of the states (though the constitution does not classify between the capital or revenue related roles of the commission while determining the centre’s assistance to the states).

In the meantime, to promote the process of planning, an extra-constitutional body i.e. the Planning Commission was set up even before the First Finance Commission was set up. The Planning Commission plays a very vital role in the process of determining central assistance to the states as all development plans, programmes and projects are within its purview. All grants or loans given by the centre to the states for developmental works are practically dependent on the recommendations of the Planning Commission. And that is why the role of the Planning Commission was said to ‘confine’
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the role of the Finance Commission i.e. a non-constitutional body eclipsing a constitutional body. P.J. Rajamannar who headed the
f
inance Commission (1966–69) suggested to clearly define the relative scope and functions of the two commissions by amending the Constitution, and the Planning Commission was advised to be made a statutory body independent of the Government. But no such follow ups came from the successive Governments at the Centre. But one thing was important, most of the Finance Commissions devoluted some extra shares in the central taxes (i.e. the income tax and the central excise) and grants-in-aid.

Since the decade of 1990s, certain events made the Central Government change its mindset regarding the role of the states in the process of development. Major events may be counted as under:

(i)
The process of economic reforms started in 1991–92 required active economic participation from the states.

(ii)
The constitutional requirement of ‘participatory planning’ mandated by the 73
rd
and the 74
th
Constitutional Amendments was enacted in 1993.

(iii)
The arrival of coalition era at the centre when over dozen political parties, having regional affiliations came together to form the Government.

(iv)
The recommendations of the Tenth Finance Commission followed by a constitutional Amendment making Alternative Method of Devolution a law in 1995.

(v)
Various new needs of the time such as tax reforms, agricultural development, industrial expansion, etc.

The year 2002 could be considered as a watershed
in the area of promoting the states’ need of financial resources in promoting their developmental requirements. In July 2002, while the Government was setting up the Twelfth Finance Commission (2005–10) the then Minister of Finance announced that in future the Planning Commission will be
playing more or less a role of collaborator to the Finance Commission
. In the same announcement, the Government made one member of the Planning Commission, a member of the Finance Commission too (a symbol of physical and ideological connection between the two bodies).
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It was as if the Government had accepted the suggestions of the Fourth Finance Commission to a great extent. Though the critics took it as an infringement of a constitutional body by a non-constitutional one, the Government clarified by calling it a symbol for promoting the contemporary needs of the economy and the fiscal federalism.

Another milestone was created in the enactment of the Fiscal Responsibility and Budget Management (FRBM) Act in 2003 which empowers the state Governments to go for market borrowings to fulfill their plan expenditure without prior permission from the central Government (provided they have enacted their respective Fiscal Responsibility Acts).
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This has boosted the participatory planning in the country by guaranteeing greater autonomous plan participation from the states.

If we look at the tax reforms process, we see a general tendency of enabling the states to collect more and more taxes, the Value Added Tax (VAT) being a glaring example by which almost all states have been able to increase their gross tax revenue receipts. The cause will be served more once the economy goes for the proposed enactment of the Goods and Services Tax (GST) from the fiscal 2009–10.

Thus, we see an overall change in the mindset of the Central Government towards allocating more financial resources in favour of the states which has been also shown by the Tenth and Eleventh Plans.

THE CHANGING NATURE AND ROLE
OF PLANNING

Led by various inter-connected and experience-based factors, a great many
new elements
have been included in the Indian planning process in recent years. Some of the new elements are too path breaking to reverse the very established thinking of planning in the country. Still some of them could be seen as the Government’s attempt to address some of the long-standing and overdue criticisms of planning in India. The inclusion of the new
methods
and
strategies
of planning has gone to change the very
nature
,
role
, and the
scope
of planning in the country. It was the Tenth Plan which is credited of doing this. Many ‘first time’ initiatives were taken up by the Plan. Usually, the plan projections in India did talk about development in the recognised sectors, but here the Tenth Plan imaginatively forges ahead towards new goals—it was undoubtedly a historic moment. The new measures initiated by the Plan
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which led to changes in planning may be seen as under:

1. The Role of State in Planned Development

It was for the first time that the Planning Commission not only went for a detailed talk on the states’ concerns but also emphasised and recognised their role in the process of development planning (in Vol. III, Tenth Plan). The Plan accepts that unless the states achieve their targets, a nation cannot achieve its targets. This is an open acceptance of the state’s role in the planning and clear pointer to the need for decentralised planning. The full meet of the Planning Commission which passed the Tenth Plan advised two important ideas in this regard:

(i)
to make the Tenth Plan a
‘p
eople’s Plan’,
and

(ii)
to make development a
‘People’s Movement.’

The Deputy Chairman, Planning Commission articulated on the ocassion that ‘people’s say in Plan is a must’. The Chairman, Planning Commission emphasised that only economic growth should not be our objective but improvement in the quality of life of the masses should be the real goal of planned development. He further added that people’s participation in the planning process is a must to make development a mass movement and helpful to all. This idea continued in the 11th Plan and proposes the 12th Plan (2012-17).

2. Agriculture Sector Accepted as the Driving
Force of the Economy

There had been a bias against the agriculture sector around the world after the Second World War–emphasising agrarian economy was considered a symbol of backwardness. This mindset, ultimately, changed the early 1990s to which the World Bank also agreed. Though the Union Budgets of 2000–01 and 2001–02 clearly referred the proposition, it was the Tenth plan which clearly accepted the ‘agriculture sector’ as the Prime Moving Force (PMF) of the economy. The Nobel Laureate Amartya Sen has also suggested on the same lines.
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