19 January 2015 Business governance: niti aayog

What’s The Plan?

The building blocks are being tumbled about—but to what effect?
What’s The Plan?
Mint
What’s The Plan?
outlookindia.com
-0001-11-30T00:00:00+0553

Seven More Questions For NITI

Has the Modi government reduced the new body’s powers and stature?
NITI Aayog runs the risk of ending up with very little powers unless its roles are more sharply defined.

Now what happens to the Five Year Plans and the states’ plan bodies?
Not clear if the FYP has died; meanwhile, states are left with no institution to discuss their plans with.

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Who will now decide on allocation of centrally sponsored schemes?
?As in case of the Modi government’s  first budget, the finance ministry is likely to get that role?

So will the PMO and the finance ministry become all-powerful in matters of federal relations?
With a final say in fund allocations, the PMO and FM will hold the cards?

Isn’t it possible to expand the role of the quasi-judicial Finance Commission?
?That seems desirable, but will require a constitutional amendment?

How will the GoI reflect Panagariya’s and NITI Aayog members’ strong views on PDS, welfare schemes?
?Direct cash transfers may get a boost, but suggestions that the PDS be revamped may get the short shift?

What will happen to the 1,100-odd people working with PlanCom?
?Most may get absorbed in the new NITI Aayog secretariat; some may be reassigned to other depts.

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***

As promised in his Independence Day speech last year, Prime Minister Narendra Modi has given the nation a new year gift: a spanking new think-tank to replace the Planning Commission (PlanCom). But strangely, the sense of unshackling that the archiving of a 65-year-old institution should bring is completely missing. There are too many questions, doubts and queries about the new entity, the National Institution for Trasforming India or the NITI Aayog. Even economist Bibek Debroy—one of the three experts chosen to steer the new-fangled think-tank—had some pertinent questions about it, right on the morning of his appointment. He declined to suggest possible answers to his posers, but had tweeted that while waiting for a doctor’s appointment, he had been “thinking of seven answers”.

Perhaps that was prudent. T.C.A. Srinivas Raghavan, an economist-columnist, had earlier tweeted to Debroy that he was “looking forward to your duels with your boss”—that would be right-leaning economist Arvind Pana­gariya, who, with his guru, economist Jagdish Bhagwati, had famously written to The Economist magazine a year ago that the 2002 post-Godhra pogroms against Muslims in Gujarat were “communal riots”, in which a quarter of the people killed were Hindus.

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Debroy is not alone in his pursuit of answers; political economists and civil society activists are equally uneasy (see graphic) about how the NITI Aayog might pan out. “We still don’t know what authority it holds,” says N.C. Saxena, former PlanCom secretary. “If it’s the same as the former PlanCom, this amounts to a mere name change.” He fears that if the NITI Aayog is not vested with constitutional authority—as seems to be the case so far—the think-tank will deteriorate and eventually become a parking lot for retired bureaucrats and defeated politicians.

While junking the PlanCom, Modi has failed to enunciate what will happen to the hallowed and time-tested national tradition of Five Year Plans. As Pronab Sen, a former principal advisor to the PlanCom, pointed out in a Mint column, the Five Year Plans served to define the strategy and set the targets for poverty reduction and inclusive growth. The World Bank does undertake such studies for various countries, but Sen has pointed out that they would lack the quality of a study produced within government­—“with direct or visible involvement of the political leadership”. At stake is the $1 billion development assistance provided by the World Bank—contingent precisely on a poverty reduction plan.

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Photograph by Jitender Gupta

Despite the many criticisms levelled at the former PlanCom, there were many roles it fulfilled, such as deciding on how to utilise available resources. Under the UPA government, it had seen an increasing engagement with civil society and domain experts. During the last budget, the crucial role of allocation of funds to the states and ministries devolved to the finance ministry. But if it has to take over that role in the long run, the ministry needs to have a separate division manned by experts who would be able to choose between spending on health, education or roads and ports.

“Socio-economic rights have witnessed a whittling down in Rajasthan, whose economic panel was run by Panagariya.”
Reetika Khera, Development economist

Pradeep S. Mehta, secretary general, cuts International, is of the view that the PlanCom should have been allowed to function till such time as the NITI Aayog becomes fully established, the way the old MRTP Act and the new competition law remained coterminous for a few years before the changeover. With rules of business yet to be unveiled, Mehta is hopeful that either the NITI Aayog will be given constitutional powers or the Finance Commission will be given the task of plan fund allocation. The latter will call for a constitutional amendment. “Con­s­titutional bodies are more effective than a statutory or non-statutory body, as they don’t have to survive on the whims of the government,” says Mehta.

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The danger at this juncture is that both Modi, who as prime minister is the NITI Aayog chairman, and Panagariya, its deputy chairman-elect, may get entangled more in the processes than in getting on with framing content. Besides, there are many development experts who are wary of Panagariya despite his high credentials: they cite his public posturing against subsidies and entitlements as an advisor to the Rajasthan government. “In the past year in Rajasthan, we have seen an incessant attack on socio-economic rights: whittling down the free medicines and diagnostics scheme, closure of 17,000 government schools, disruption of a special pds food package for the Sahariyas, a group of particularly vulnerable tribals who are in the news for starvation deaths and bonded labour,” says development economist Reetika Khera. “We do not know who suggested these policy changes, but the fact is that the state’s economic advisory council has been headed by Prof Panagariya since the middle of 2014.” Khera’s views are echoed by Nikhil Dey of the Mazdoor Kisan Shakti Sangathan. “We are completely against his public posturing. He says all these entitlement legislations like NREGA and cheaper medicines are doles. He has given some funny calculations about wastages in NREGA. These things we do not agree with,” says Dey.

Even the states are unhappy and unsure. Mehta, for one, is satisfied over the fact that many of the suggestions on the revamping of the PlanCom given by CUTS International have been taken on board, particularly those about “greater engagement” with the states. Many experts, however, fear that the heavy engagements of chief ministers may lead to long-drawn-out consultations. Some experts have even suggested that, rather than CMs, the day-to-day engagements could be handled by other officials, such as resident commissioners.

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But that is a matter of detail. Prof Balveer Arora, who’s chairman of the Centre for Multilevel Federalism, is of the view that the whole pitch of meaningful engagement with states is more hype than substance. “I don’t quite see states being empowered by this change. The replacement is not a stronger and more federal body but a weaker institution where the power that is lost is moved to the Union cabinet or more precisely to the PMO and the finance ministry,” he says.

The old PlanCom style of inviting CMs to  present their cases may have seemed high-handed, but replacing the National Development Council and making all CMs part of the NITI Aayog’s governing council may not serve the same purpose. Experts point out that the PlanCom allowed for a certain amount of political bargaining and award. This role, many expect, will be taken up by the prime minister, who is known to follow a policy of “command and control”.

Addressing concerns on this front, Union finance minister Arun Jaitley told delegates at the Bengal Global Business Summit earlier this week that there will be less strings attached on the funding provided to states. “In the process, the states will be more financially empowered and get more central funding,”  he said. Given the thorny relations between many states and the Centre when there is a political divide, NITI, or the idealised pursuit of the rightful path, may be lost. That raises a key question: Why was the effort taken to coin the acronym NITI not expended on creating a stronger plan body?

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