Snuffing out PC: Throwing baby with bathwater

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Snuffing out PC: Throwing baby with bathwater

Sunday, 10 April 2022 | PROF SATYA NARAYAN MISRA

Prime Minister Narendra Modi during his Independence Day address from the ramparts of the Red Fort in 2014 had declared the demise of Planning Commission (PC), a 64-year-old institution founded on the Command Economy model of the Soviet Union. Arun Jaitley described the Planning Commission as 'redundant organisation, relic of the past which is irrelevant in a market driven India.’ Any discerning  analysts believed that the Prime Minister had acted in haste and ’thrown  the baby with the bath water’.


In a riveting recent book 'Planning Democracy,’ young  historian Nikhil Manon brings out a fascinating history of planning in the 30s and its blazing heights in the 50s and the salience of democratic planning  for India.


Harking back to history he notes how the USSR established Gosplan as was the  centralised agency to foster rapid  industrialisation.  Grigory Feldmen, an electrical engineer and economist, was its prime   architect (1928-1932). Interestingly, when economic depression struck  the USA in 1930s,  it was left to Simon Kuznets  to bring out national Statistical Data about the dip in GDP and unemployment. This   formed  the basis for Franklin D Roosvelt  to lunch State planning through the New Deal programme. The 1930s thus witnessed a coalescence of planning as a public policy, for  ideologically different countries. 


The dawn  of independence laid to a surge in  India’s interest in data. Stimulated by the needs of a planned economy, the 1950s saw a massive expansion in the fledgling State’s data capability. At the centre of the  development was PC Mahalnobis, the presiding geneous of statistics in India and Indian Statistical  Institute Calcutta, where  he was the patriarch.  With full political support of Nehru who established the Planning Commision in 1950 , he was the author of the crucial 2nd five year plan (1956-61) whose underlined stretegy of vast public sector footprint, import substitution and heavy industrialisation .


It is to the credit of Mahalnobis that the NSSO was created and they conducted the biggest and most comprehensive sample inquiry ever undertaken in any country in the world. Nobel  Laureates Angus Deaton writes: 'The world’s first   system of household surveys applied the principle of random sampling which was designed  by Prof Mahalnobis.' The period after the second World War was a globalised epoch of statistic driven numerical  positivism. The faith in data entered the era’s zeitgist . While Nehru called the 2nd Plan  document 'the horoscope  of Mother India’  Prof BR Senoy as also Kripalini who considered it anti Gandhian.   The 2nd plan reflected the policy of import substitution and heavy industrialisation by giving low priority to investment in agriculture. This kind of thinking was driven  by a seminal paper  by Hans Singer   and Raul Prebisch  in 1950 who brought out that the terms of the trade in less developing countries declined  relative to richer country in view of their higher content of primary goods.


Paul Rosentein Rodan  in 1943 had also strongly advocated for a Big Push  theory which advocated injection of industrial investment beyond a certain threshold to break through a new equilbrium. While the 2nd Plan started in full cry in the initial years,  it had to be aborted towards the end as India was bleeding  out of its foreigh exchange reserves.


While the Planning Commission has become  anacronistic in India’s market driven approach,  the data capacity  and its analysis  in 1950 remain relevant as ever. It is due to the information harvested by  national sample surveys that we know acurately about the level of poverty and unemployment in the country. Unfortunately over the  recent decades India’s statistical infrastructure has suffered a decline, due to a combination of neglect and understaffing.  Deaton had observed in 2005: 'Mahalnobis and India led  the rest of the world.' Most countries envy India and its statistical capability. However , good data can be bad politics. When the NSSO brought out that unemployment was at 45 years high in 2017 , the Government  was not pleased and for the first time the Government tried to scrap  the survey as it was on the anvil  of facing an election. Thomas  Pikketty  in  anguish had  observed 'We are supposed to live in a big data but the Government of India’ s action looks more like big opacity.'


Ironically, the policy of self reliance and protectionism which were the defininig features  of Nehruvian economics are back in fashion with Modi’s Atma Nirbhar Bharat  campaign. This is not peculiar to India . From Washington to Bejing , London to France,  the Governments  are falling in love  with economic self sufficiency, State intervention and hyper nationalism. It is a part of a backlash against free trade  and globalisation. What distinguishes present  moment in india from Nehruvian times is  official anti intellectulism that manefest in the short shift being  given to  professional expertise . The public still yearns for a technocrat who can deliver economic bounty.   It was  Prof Mahalnobis who played that   key role  in  the 1950s, Dr Manmohan Singh in the 90s and to a certain extent it was Raghu Ram Rajan during 2013-16.


India’s experience with economic planning has to be understood from the frame of technocracy and technology on the one hand and the political  project of democratic planning on the other. By establishing a planned economy, India  instituted capability like NS Survey, National Income Accounts, and a Central Statistical body.   Mobilising citizens for development needs without totalitarian means was integral to the Nehruvian ideas of a State which chose a neutral path during the Cold War.


Planning is a technology exercise in directing the economy as  a means for modern State building. It was fundamental to independent India revealing  the States far reaching ambition,  its promises and failures. By decimating the planning structure , the Modi Government has snuffed away a major mechanism that set the template for reviewing State ’s progress against various macro and sectoral targets. It has also taken away accountability which is the life breath of liberal democracy. Autonomy of professional bodies in collecting and analysing data is also under  threat. The whole edifice of democratic planning is getting obfuscated under the smokescreen of cooperative federalism ,  pious platitudes and rhetoric. 


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