7.0 LEARNINGOUTCOME. 7.1 INTRODUCTION. Structure. 7.1 Introduction

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1 - - UNIT 7 ROLE OF PLANNING COMMISSION AND NATIONAL DEVELOPMENT COUNCIL IN POLICY FO ULATHON Structur 7.0 Larning Outcom 7.1 Introduction 7.2 Rol of Planr~ing Corn~nission 7.3 Planning Commission: Organisational Structur 7.4 National Dvlopmnt Council: Rol and Composition 7.5 Planning Procdur: Formulation of Fiv-Yar Plan and Annual Plans Fiv-Yar Plans Annual Plans 7.6 Rol ofplanning Commission: Rviw 7.7 Conclusion 7.8 Ky Concpts 7.9 Rfrncs and Furthr Rading 7.10 Activitis 7.0 LEARNINGOUTCOME. Aftr st~~dying this Unit, you sl~ould b abl to: Undrstand th rol and f~lnctions of th Platlning Commissioi~; Discuss th organisational structur of th Planning'Cornmission; Explain th composition and rol of th National Dvlopmnt Council; Dscrib th rol of various agncis in th planningprocss; and Rviw th rol of Planning Comrnission in policy forrnulation. 7.1 INTRODUCTION Planning has bn an intgral part bf~ndia's dvlopmntal and administrativ procss. Ovr th yars it has gaind lgitimacy in tl Indian fdral systm. Th goals, prioritis and dirction st by th national Planning Commission ar basd on anon-partisan approach, backd by xprtis and rliabl tchnical xrciss, Th Indian ladrs wr intrstd to bas futur conomic progrss and growth on a comprhnsiv long-trm planning. Thrfor qs arly as 1946, bfor th transfr of powr, a Planning Advisory Board was appointd, which rcommndd th appointmnt of a Planning Commission to dvot full attntion to th task of plannd dvlopmnt. As arsult, th Planning Cornmission iyas constitutdin March, 1950 by arsolution of th Govinmnt of India. It was dcidd that th stat has to play an impor&ant rol in bringing socio-conomic transformation, as rquird by th Dirctiv Principls of Stat Policy. Th Planning Commission consults th

2 Public Policy and Analysis Union ministris and th stat govrnmnts whil formulating fiv-yar plans, and annual plans, and ovrss thir implmntation. In this Unit, w will highlight th organisational structur and functions of th Planning Commission and th National Dvlopmnt Council in India. Th planning procss and formulation of fiv-yar plans will also b discussd. In th subsqunt sction, w will concntrat on th growth prfor~nanc through Fiv-Yar Plans, and rviw of th rol of Planning Commission in policy fo~inulation. 7.2 ROLE OF PLANNING COMMISSION Th rol of th Planning Commission is dirctly rlatd to th tasks assignd to th govrnmnt by th Indian Constitution in its Dirctiv Principls, spcially thos rlating to conomic and social rivlopmnt. Th Dirctiv Principls of Stat Policy urg upon th stat to scur citizns' right to adquat mans of livlihood and control th inqualitis in th ownrship of walth and mans ofprod~tction. In this contxt, th stat is rquird to nsur growth in production, and its quitabl distribution among th various sctions of socity. In this contxt, th Planning Commission fo~mulats plans for th whol country and also functions as an advisory planning body at th apx lvl. Th major functions of th Planning Commission, assignd as pr th Govrnmnt of India (Allocation of Businss) Ruls 1961, ar as follows: i) It maks an assssmnt ofth matrial, capital and human rsourcs of th country, including tchnical prsonnl, and formulation of proposals on th basis of possibilitis of augmnting such rsourcs that ar found to b dficint. b) Formulats a plan for ffctiv and balancd utilisation of rsourcs in th country. c) Dfins th stags in which th plan should b carrid out, and proposs th allocation of rsourcs for compltion of ach stag. d) Idntify th factors, which tnd to rtard conomic dvlopmnt and dtrmin th conditions, which in viw of th currnt social and political situation should b stablishdfor th succssful xcution of thplan. ) Dtrmins th natur of machinry, that is, ncssary for implmntation of th Plan. i) Appraiss th progrss achivd in th xcution of ach stag of [h Plan, and rcommnds th adjustmnts of policis and masurs that such appraisal may show to b ncssary. ) Maks intrim or ancillary rcommndations, which appar to b appropriat ithr for facilitating th discharg of th dutis assignd to it or on a considration of prvailing conditions, culrnt policis, masurs and dvlopmnt programms or on an xamination of such spcific problms as may b rfrrd to it for advic by th Cntral or Stat Govrnmnts. Tn addition to th abov-mntiond functions, th Planning Commission has bn ntrustd with rsponsibility in th following mattrs. a) Public Coopration in National Dvlopmnt; b) Spcific programms for ara dvlopmnt lik Hill Ara Dvlopmnt Programm; c) Prspctiv Planning; d) Institut of Applid Manpowr Rsarch; and ) Ovrall Coordination of th Pradhan Mantri Gramodaya Yojana (PMGY). Not: Th ovrall coordination of th PMGY shall b th rsponsibility of th Planning Commission. Howvr, concrnd nodal rninistryldpartmnt will b rsponsibl for th ovrall managmnt and rfionitoring of th s~toral programms undr PMGY

3 Rol qf Plat~~zi~zg Conzmission and NDC in Policy Formulation 93 I r Tt is vidnt from th abov dscription that th Planning Commission has bn mad rsponsibl for almost al1,aspcts of planning, xcpt xcution. To formulat a plan, first of all, a st of objctivs or goals is prpard that ar rquird to achiv th targt, such as, growth of national incom, rduction of th prcntag of unmployd prsons, tc. Scondly, tim fram and th, stags in which ths goals ar to b achivd ar dcidd. For dciding th abov-mntiond stags on has to stimat th rsourcs. For xampl, do w hav nough rsourcs to litrat vryon in fiv yars? Aftr stimating th rsourcs, th Commission dtrmins a stratgy to mak th bst utilisation of limitd rsourcs. Thus, th formulation of a plan implis th stting up of prioritis, tim fram, and stags; stimating th rsourcs; and dciding on a stratgy, which is th major function of th Planning Commission. Aftr th formulation of plan, th cntral ministris and th stat govrnmnts xcut th plan through thir dpartmnls. Th Planning Commission kps an y on th progrss of th plan, idntifis impdimnts, and suggsts rmdial masurs. It monitors and valuats th plan. For this purpos, it maks apost-mortm of th past plan and draws lssons, which ar usd to build subsqunt plans. In this contxt, th Programin Evaluation Organisation (PEO), priodically undrtaks valuation dtails or quick studis of th inlplmntation of slctd dvlopmnt programms to assss th impact of that programm. Thus, it assists th Planning Commission to provid usful fdback to plannrs and implmnting agncis which contribut in policy-making. 7.3 PLANNING CO ISSION: ORGANISATIONAL STRUCT As th Planning Commission was st up by arsolution of th Govrnmnt of India, it is not a stahitoly body. Thus, th plans foimulatd by th Planning Commission hav 110 lgal status. Though it appars as an advisory body, in practic, it wilds considrabl authority. Th Prim Ministr of India is th x-officio Chairman of th Planning Commission. W will now turn to a discussion of th stmctur of th Planning Commission. Chairman Th Prim Ministr of India has bn its Chairman sinc th vry incption of th Planning Commission. It works undr th ovrall guidanc of th National Dvlopmnt Council. Th Chairman participats and givs dirction to th Commission on all major policy issus. It is to b notd that th Prim Ministr attnds only th most important mtings of th Commission so as to nsur that th Commission's proposals coming up bfor th Cabint ar viwd objctivly. Dputy Chairman Th Dputy Chairman, full-tim, looks aftr th day-to-day work of th Planning Coinmission. Hlsh is usually a politician of standing blonging to th nlling party at th Cntr. At tims, an xprt in conomic dvlopmnt is appointd as Dputy Chairman. Prof. D, R Gadgil anddr. Montk Singh Ahluwalia ar such xampls. Th Dputy Chairman njoys th rank of a Cabint Ministr, although h may not ncssarily b ammbr of th Council of Ministrs. A Ministr of Stat is givn th portfolio of planning in ordr to facilitat accountability to th Parliamnt. Mmbrs All full-tim Mmbrs of th Commission ar in th rank of Union Ministr of Stat. Thr ar two typs of mmbrs, in addition to th Ministr of Stat for Planning who is'also an x-officio mmbr of th Planning Commission. Th full-tim mmbrs ar minnt public prsons, administrators, conomists and tchnical xprts. In addition, th Planning Commission has a fw

4 94 P~~blic Policy and An.alysis important Cabint Ministrs, as its mmbrs, who attnd th mor important mtings of th Commission. Th fw important mtings that covr only th most important dcisions which all mmbrs, full-tim and ministr-mmbrs, attnd ar calld th mtings of th full Commission. Apart from that, th Planning Commission with finll-tim mmbrs mts frquntly and acts as a tam. Th Dputy Chairman and th full-timmlnbrs of th Commission function as a composit body in mattrs of dtaild plan formulation. Th Dputy Chainnan and th full-tim mmbrs look aftr th day-to-day work. Th Prim Ministr appoints ths mmbrs aftr consulting th Dputy Chairman, from among prominnt public prsons and xprts. Thfull- tim mmbrs ar not givn a fixd tnur, but normally thy continu till ths is a chang in th govrnmnt. Hr it is worth mntioning that in 1990 th full-tim mmbrs wr changd thric in a singl yas. Each mmbr of th Commission looks aftr a spcific st of subjcts. Ths Mmbrs dirct, guid and advis various Subjct Divisions of th Planning Commission in th xrcis of prparing approach paprsjdocumnts for fiv-yar plans and annual plans. Thy also provid guidanc to th Subjct Divisions for monitoring and valuating thplans, programms, projcts, and schms. Th Cornmission has collctiv rsponsibility for all dcisions, and its mmbrs work as a collctiv body. Each mmbr dals individually with th tchnical and othr aspcts of his/hr allottd subjct(s). Howvr, th Commission considrs all thos cass that rquir policy dcisions, or whr diffrnc of opinion xists btwn its mmbrs. Th following chart dpicts th osganisational structur of th Planning Commission. As on Fbruary 1,2006 thr wr, total 48 contributors including th Chairman, th Dputy Chairman, th Ministr of Stat, 13 Mmbrs (6+7), th Scrtary, 4 Principal Advisirs, 20 Advisrs, 2 Snior Consultants, th Joint Scrtary and Additional Scrtary &FA, th Dirctor (IAMR), th Joint Scrtary, th Joint Advisr, and th Advisr to Dputy Chairman. Chart 7.1: Organisational Structur of th Planning Commission Q. (Prim Ministr)., Dputy Chairman Ministr of Stat Mmbrs Mmbrs for Planning (Part-Tim) and Mmbr 1 1 Scrtary I Snior Consultants, Sourc: Planning CornmiSsion, Govrnmnt of India

5 Rol of Planning Conznzission and NDC in Policy Foriizulation 95./ Offic of th Planning Commission Th Mmbrs of Planning Commission ar assistd in thir tasks by an offic comprising various tchnical and subjct divisjons. A snior officr or xprt is th had of ach division dsignatd as th 'advisr', who is a snior lvl officr of th lvl of Joint Scrtary or Additional Scrtary. Th had of division functions undr th guidanc of th mmbr in-charg of that particular subjct. Th tasks of co-ordination andovrall suprvision and guidanc of th work of th division, spcially in non-tchnical mattrs, is th rsponsibility of th Scrta~y, Planning Commission. All th divisions in th Planning Co~nrnission concrnd with plan formulation, monitoring and valuation ar groupd into thr typs of divisions as mntiond blow: i) Subjct Divisions Th Subjct divisions look aftr spcific subjcts, such as, agricultur division; communication and information division, powr andnrgy division, scinc and tchnology division, ducation division, 111ral dvlopmnt division, transport division, tc, Th numbr of subjct divisions hav gradually incrasd at th nd of March 2006, stood at svntn, which ar concrnd with spcifid Glds of dvlopmnt in th rlatd aras. All th divisions ar involvd in th task of forlnulation of a plan, which rquirs tchnical inputs of various kinds and spcialisd knowldg of th subjcts, that is, bing providd by th concrnd division. n - U *,. ii) Spcialist Divisions Th spcialist divisions ar concrnd with diffrnt aspcts of th ntir conomy lik prspctiv planning, financial rsourcs and dvlopmnt policy. Following spcialist divisions ar functioning in th Planning Commission: Dvlopmnt Policy Division, Financial Rsourcs Division, Labour, Employmnt and Manpowr Division, Plan Coordination Division, Prspctiv Planning Division, Projct Appraisal and Managmnt Division, Intrnational Economics ~ivision. Infrastnlctur Division Programm Outcom and Rspons Moni toring Division Socio-conomic~Rsarch Unit, Stat Plan Division, and Mu1 ti-lvl Planning Division, which includs Hill AraDvlopmnt, Dcntralisd Planning, tc. As our Unit is concrnd with planning and policy-making, thrfor w will discuss brifly th rol of Prspctiv Planning Division. _ I & #P~ Prspctiv Planning Division dp " Prspctiv Planning Division (PPD) plays an important rol in ovrall intgration bf th.:plan'in'to macro-conomic framwork, dlinating possibilitis and constraints; andproj&ting2i.ong-trm

6 9 6 Public Policy and Analysis vision of dvlopmnt in trms of potntials, constraints and critical issus. In addition, as apart of its rgular activitis th PPD: 0 Assists th Planning Commission in forming its viws on tchnical issus rgarding planning procss, shift of a public sctor programm from Non-Plan to Plan sid of Govrnmnt xpnditur and vic-vrsa; o o Prpars an ovrall framwork for mdium andlong-trm plans by analysing implications of long-trm objctivs for th appropriat stratgy of dvlopmnt; Examins th currnt policis and programms Qcijlly in th intr-tmporal, intr-rgional, and intr-sctoral contxts; Estimats stat-wis povrty ratios using houshold consumr xpnditur survys conductd by NSSO and analyss th changs in th povrty indics; Studis consistncy btwn plan objctivs and plan allocation, conformity of rgional distribution of public sctor outlays with th rgional nds of dvlopmnt, ffct of pric ris on consumption lvl of popl in diffrnt incom groups, trnds in saving, invstmnt and conomic growth, trnds in forign trad, and th implications of various dvlopmnts in th conomy for public invstmnt. Rndrs advic on th influnc of macro-conomic dvlopmnt on principal commoditis lik food, crud oil, and stl; and Contributs to th rspons by Planning Commission on issus rgarding "Planning Procss" posd by Parliamnt, forum of conomists and conomic ditors, rprsntativs of conomic planning agncis in th stats, and dlgation from national Planning Commissions from othr countris and trans-national institutions bing through th rspctiv nodal Ministris of th Govrnmnt. In th nxt subsqunt sction, w will highlight th rol and composition of National Dvlopmnt Council, which is th othr important body associatd with national planning. 7.4 NATIONAL DEVELOPMENT COUNCIL: LE AND CO Th National Dvlopmnt Council (NDC) was st up in August Th main purpos of th NDC is to strngthn and mobilis th ffort and rsourcs of th country in support of th fivyar plans, and mor spcifically, to: 0 promot common conomic policis in all vital sphrs; and nsur th balancd and rapid dvlopmnt. In th draft outlin of th First FG~-~ar~lan, th Commission rcommndd th nd and ncssity of a body rprsnting th cntral and stat govrnmnt~~to nabl th plans to hav a national. charactr. It mphasisd that in a larg country lik India whr th stats hav, undr th Co'nstitutiori, full autonomy within thir own sphr of dutis, it is ncssary to hav aforum, such as, th National Dvlopmnt Council at which, from tim to tim, th Prim Ministr of India'and th Chif Ministrs of S tats can rviw th working of th Plan and its various crucial aspcts. Th NDC is nithr aconstitutional nor statutory body. Basically it is an advisory body on planning. At prsnt, th NDC is composd of th Prim Ministr (also its chairman), thdputy Chairman, th Chif Ministrs of Stats, and th Mmbrs of Planning Commission. Somtims outsid xprts hav aiso bn invitd to th Council's mtings, whnvr ncssary. Th Scrtary of th Planning Commission is th x-officio Scrtary of th NDC, Th NDC maks its

7 Rol qf' Planning Commission and NDC in Policy For~nulation 97 rcommndations to th cntral and slat govrnmnts in India. Th major functions 01 th NDC as laid down in th Govrnmnt of India Rsolution (No. 65/15/CF-67) ar to: 9 considr important qustions of social and conomic policy af'fctingth nation's dvlopmnt; and 0 rviw th working of th Plan from tim to tim to rcommnd masurs for th achivmnt of th aims and targts st out in th National Plan. Th lattr includ masurs to scur th activ participation of popl, improv th fficincy of th administrativ srvics, nsur th fullst dvlopmnt of th lss advancd rgions and sctions of th community, and to build up rsourcs for national dvlopmnt. Th NDC can tak up any issu rlatd to national dvlopmnt. Th NDC maks its rcommndations to th cntral and th stat govrnmnts. In th past, th NDC has dlibratd and dcidd on a numbr of issus, such as, intr-rgional disparitis, prohibitiori, panchayati raj, agrarian coopration and irrigation lvis. Th NDC is rquird to mt at last twic a yar, though it has somtims mt mor oftn. Givn th siz of th body and th busy schdul of its mmbrs, it is not possibl for th NDC to mt frquntly and go into grat dtails rgarding ach spcific mattr. Thrfor, it has bn dcidd by th NDC to appoint, from tim to tim, suitabl sub-commitls or panls. Th agnda for th mtings includs approval of th approach papr to th fiv-yar plan, th draft fiv-yar plan, and th final fiv-yar plan. In addition to th abov, othr mattrs form a part of th agnda suggstd by mmbrs of th NDC. Th statur of th Council has nsurd that th 'rcommndations' of th NDC hav th prstig of dirctivs that ar gnrally followd and obyd. Now, w will discuss planning procdur to formulat and concrtisd in th national plans. 7.5 PLANNING PROCEDURE: FORMULATION OF FIVE-YEAR PLAN AND ANNUAL PLANS Th principal task of th Planning Cornmission is to formulat th fiv-yar plans. In this contxt, propr planning procdur is followd for th most ffctiv and balancd utilisation of th matrial, capital, and human rsourcs. Spcial mphasis is givn to appraisal of th progrss in th imp1mnt;ltion of th plan from tim to tim, and to rcommnd adjustmnts of policy and masurs that ar considrd to b ncssary in th light of such appraisal. Th Planning Commission also ovrsas th dvlopmnt prograinms of th cntral ministris and th stat govrnmhts with a viw to achiv coordination at th highst lvl. At th Union lvl, th rol of Planning Colnrnission is crucial. In invstmnt planning, it provids an objctiv mthod of rsoprc, allocation rconciling th compting claims of various dpartmnts and agncis, taking into account th broad nitional objctivs andprioritis. A national plan in India compriss of th plans of a cntral govr~lmnnt, th stat govrnmnts, th cntral and stat public-sctor undstakings, and th privat sctor of th conomy. In th fiv- yar plan'documnt, th amount of mony, which is proposd to b invstd undr various plan hads during th' spcific priod is brokn down into public sctor outlay and privat sctor plan outlay. Th public sctor outlay is th mor important part in th plan as th govrnmnt has dirct control ov& th in'vstmnt.of this sctor du&g a fiv-yar prlod. It is fuphr dividd into th cntsal plan and.stat plans, armarking th projcts and schms to b launchd. In this plan, spcific schms of financing ar workd out for th Union and ach stat, indicating clarly th additional rsourcs, andmobilisation fforts that would nd to b undrtakn. Ths ar intgratd with th ovrall schm of flow of funds for th conorny, Thus, prparatiori of th fiv-yar plan for th nation's conomy is a mammoth xdis involving many multipl.constitutional authoritis and statutory agncis.

8 9 8 Public Policy and Arznlysis Th national plan must hav th involvmnt and consnt of th partis conc~nd. Th formulation of ach plan is prcdd by considrabl amount of tchnical work, prolongd consultations and intns lobbying to arriv at consnsus, spcially on th various paramtrs of stat plans. Th nd for building a consnsus ariss as India is afdral and dmocratic polity. Th constitution pl'ovids for th dmarcation of subjcts btwn thunion, th Stat, and th Concursnt lists in th svnth schdul of th Constitution so as to conform to th nollns of a fdral polity. Morovr, planning falls undr th concurrnt list. Thrfor, it is th rsponsibility of both th Union and stat govrnmnts. Th national plan must b abl to calry along th cntral ministris and stat govrnmnts on a gnrally accptd cours of action. Evn th dmocratic structur yquirs that th national plan should b folmulatd through consnsus. Thus, it involvs wid-ranging discussions, and participation of non-dpa-trnntal agncis also. In addition to th involvmnt of spcialisd institutions, such as, th Rsrv Bank of India, th Cntral Statistical Organisation, tc. Th political ladrs, businss and industry groups, tc. ar also involvd at various stags. Public opi~lion is also sought on th important aspcts of th plan. Th Planning Commission sks to nsur through th annual plans, which as th oprational plans, that thsum total of outlays of th cntr and th stat tallis with th stimats of availabl rsourcs. h th subsqunt sctions w will discuss th formulation of fiv- yar plans in India Fiv-Yar Plans In th procss of plan formulation thr ar thr clarly distinguishabl stags. Th first stp and th prliminary stag involvs th prparation of a papr on 'approach to th plan'. It is a brif documnt, broad1 y outlining th goals to b achivd during th proposd fiv-yar plan priod. It is basd on documnts prpard by various working groups and a string committ. For prparing an z~ppsoach papl; String CommittNorking Groups ar st up for rviwing th progrss in th ilnplmntation of th fiv-yar plans, and for making rcommndations rgarding policis, programms, projcts, and schms as also for outlays and targts for th various sctors and sub-sctors. Mmbrs of th string committ and working groups ar drawn from officials in th Planning Commission, cntral ministris/dpartmnts, acadmic institutions, stat govrnmnts and spcialists from businss and industry, and xprts from rlvant filds. For th Tnth Fiv- Yar Plan, 27 String Committs and 98 Working Groups wr stup. Th approach papr is prpard on th basis of prliminary xrciss undrtakn in th Planning Coinmission, projcting th growth profil of th conomy ovr apriod of yars including. - th nsuing fiv-yar plan priod. Th draft of th approach papr is first considrd and discussd in th mting of th full Planning Comrnissioh, and thn by thunion Cabint and finally by th NDC. Aftr th approval of th NDC, it is placd bfor th Parliamnt. Aftr final approval on th approach papr th broad fiv-yar targts ar givn as guidlihs to a numbr of Working Groups.,Ths Groups ar st up and work with assistanc from th divisions of th Planning Commission. Thy ar gnrally subjct or ara-spcific, Such as, Working Groups on Financial Rsourcs of th Cntr, which includs, intr alia, rprsntativs of th Planning Commission, Ministry of Financ, and Rsrv Bank along with othr rlvant organisations. Ths Working Groups usually consist of conomists, concrnd tchnical xprts, and administrators in th concrnd cntral ministris and in th Planning Commission. Th primary task of th Working Group is to work out th dtaild plan for ach sctor on h basis of th prliminary guidlins. Thy ar xpctd to spll out th dtails of policis and programms rquird for achiving th targts. Th Working Groups ar xpctd to us rsarch studis in th spcific aras. In cass of gaps in knowldg and information, th concrnd division promots spcific rsarch studis or holds sminars, workshops tc. In th scond stag ofplan formulation, th stat govrnmnts ar ncouragd to hav thir own Working Groups, and th Cntral Working -- Groups - _ ar also xpctd to intract infoformally with thir stat countrparts. Th rcommndations I *

9 Rol. of Plan~zing Co~~zmission~nizd NDC in Policy Formulatio~z 99 ' of th Stat Plan Sctoral Working Groups ar basd on th plan proposals of a Stat Plan Advisr. I-I prpars a rport making dtaild rcommndations on programms, targts and outlays. This rport forms th basis of discussions btwn th Planning Commission and th stat govrnmnt, concrnd, for finalising th Stat's Plan. Th final position, spcially rgarding th stats own rsourcs, including m@t bosrowings and additional rsourc mobilisation, th quantum of cntral assistanc and prograrm contnt mrg aftr th abov statd discussion. 111 th Tnth Fiv-Yar Plan, th Division concrnd prpard a Background papr spcially in th cas of cntral plan taking into account th guidlins laid down in th approach papr, th riommndations of th Working Groups concrnd, proposals from th various ministris, and th division's own assssmnt of tih dvlopmnt programms. Th Backgsour~dpapr constitutd th basis for disc~ission btwn th Planning Commission and th Scrtaris cf thcntral ministris/ dpastnnts concrnd. In th light of th discussions and anticipatd availability of th rsourcs for th cntral plan, th Planning Colnmission took a viw on th dvlop~nnt programms of ach ministryldpartinnt and workd out tntativ outlays. On th basis of such xrciss don, th Planning Commission prpars th 'draft' fiv-yas plan. Th cntral and slat plans, togthr with th schm of financing for ths, ar finally incorporatd in th draft. As w hav discussd in th cas of th approach papr, similasly, th draft plan is first discussd by th full Planning Commissio~~, and thn by th Union Cabint, bfor prsnting it to th National Dvlopmnt Council. Aftr th NDC has approvd th Plan, it is laid on th tabls of both Houss of Parlia~nnt. Th draft plan is subjctd to public scrutiny in th final stag of plan fo~mulation. It is discussd with andcomrnntdupon by th 'cntral ministris and stat govrnmnts. Th draft plan is publishd for public discussions. Th draft plan is discussd by th Par1 iamnt in a gnral way, and thn in gratr dtail through a sris of parliamntary committs. Simultanously, th Planning Co~mission also holds discussions on th plms of individ~ml stats. Th discussions ar hld at th xprts lvl as wll as at th political lvl culminating in amting with th Chif Ministr of th stat concrnd. Ths mtings lad to an undrstanding btwn th Commission and th stats. On th basis of discussions at diffrnt lvls, and on th basis of ractions from lctd rprsntativs, xprts and th public, th Planning ~o&ssion prpars th final plan documnt. Th full Commission, th Union Cabint, andith NDC sc'rutinis this documnt. Thraftr, it is prsntd to th Pasliamnt, for its assnt. Th gnral approval of th Parliamnt is considrd to b s~fficintfor -th fonnulation of th Plan. In th cas of implmntation, no law is rquird for taking up th plan. W will now discuss th fo~mulation ofth annual plans Aiiilual Plans In th cours of actual implmntation, th annual plan is an ffctiv instrumnt. Somtims du to dlays in th formulation of fiv-lu plans or du to political or conomic changs during th plan priod, th annual plan bcoms an intgral part of th budgting xrcis, both at th cntsd k d stat lvls. Th procdur for th fonnulation of th ann~ial plan has bn th sam as for th fiv-yar plan till 1993:94, spcially in th& cas of th stats. Howvr, whil formulating th Annual Plan th rsourc valuation was mad first on th basis of which th siz of th plan was to b dcidd in th discussion btwn th Dputy Chairman and th Chif Ministrs. Thraftr, th dtaild sctoral allocations wr workd out. This approach in finalising th plan siz has bn highly apprciatd,in thk sctoral allocation, in th stat sctor, gratr flxibility was providd (by limiting th armarking of funds to about 50% of total outlay) to th stats to mt th local rquirmnts. This practic was initiatd in rspons to long-standing dmand of th Chif Ministrs in thndc for gratr flxibility in th Stat Plan.

10 100 Public Policy and Analysis, As th financial yar in th govrnmnt starts on I" of April and th budgt is prpardby Fbix~arynd, work on th annual plan has to start ra fw months arlir, gnrally around Sptmbr of th prcding yar, Th Planning Commission indicats to th stat govrnmnts th important objctivs of th annual plan, and th tntativ quantum of cntral assistanc to nabl th stats to prpar thir draft annual plans. Ths drafts a discussd in mtings, which ar hld in Novmbr- Dcmbr vry yar, btwn th Planning Commission and stat govrnmnts. In th& mtings, th stat annual plan oc~tlays ar dcidd along with th important itms of th cntral plan assistanc. This channl of transfr of rsourcs from th Union to th stats, in practic, is outsid th purviw of th transfrs rcommndd by th constitutional body, namly, th Financ Commission. A fiscal transfr thmugh & Planning Commission, which is anon-statutory and advisory body, has, thrfor, bn a subjct of controvrsy. Dspit widsprad criticism from xprts and political lits, this practic is continud. Th stat budgts ar dpndnt on annual plans. Th Cntral ministris' budgt allocations ar also dpndnt on thir annual plans, which ar workd out in consultation with th Planning Commission. Thus, th Planning ~ormnission, in practic, is not mrly an advisory body, it wilds normous powr in th allocation of a substantial volum of financial rsourcs to th stats and btwn diffrnt dpartmnts of th Union govrnmnt. By going into th dtails of dvlopmntal schms andprojcts, it xrciss considrabl discrtion rgarding thir accptanc or substantial modification. Th Planning Commission has also bn. Iaying patticulas mphasis on th nd for.improving th planning procss, and dvloping capabilitis in this rgard in th stats. 7.6 ROLE OF PLANNLNG CO ISSION: REVIEW W hav studid th functions of th Planning Commission and th NDC in th procss of plan - J'o~~nulation. W hav sn that ths two bodis ar important in policy formulations, dspit th Fact thal thy ar non-statutory advisoiy bodis. Th Planning Commission is mainly rsponsibl for dvlopmnt policis, and rviwing th achivmnt subsquntly. In viw of th considrations 1 outlind as th socio-conomic dvlopmnt, tabl 7.1 highlights th growth prformanc in th fi v-yar plans. It is vidnt from th data prsntd in th abov tabl that th Tnth Fiv-Yar Plan aims at achiving an avrag growth rat of th Gross Domstic Product (GDP) of 8 pr cnt pr annum ovr th priod On th basis of comparativ study 'it appars that th conomy has prfs~md bttr than th targts in fiv of th nin prvious plans and yvn in th Scond Plan. In th Third and Fourth Plans th shortfalls wr largly du to xognous shocks that could not b prdictd. During th Third Plan th conomy suffrd du to drought in th yars of 1965 and At th sam tim, th Indo-Pakistan War of 1965 also aftctd th conomy. Onc again thr wr thr conscutiv yars of drought, that is, from 1971 to 1973 during th'fourth Plan and th first oil-pric shock of It may b statd that sin5 th Fourth Plan th rat of th conomy had improvd stadily until th Ninth Plan, whn it rc0rdd.a marginal dclin. It may b sn (tabl 7.1) that th rat of growth of GDP during th Eighth Plan was nar 6.7 pr cnt pr annum, which has droppq to 5.3 pr cnt during th Ninth Plan. This was against th targt of 6.5pr cnt that was supposd to b achivd in th Ninth Plan priod. As far as causs of such dclin ar concrnd, thy can b tracd through th sctoral stmctur of th growth rats. During this priod, th rat of growth has dclind spcially in th agricultur and manufacturing sctors, as cornpardto th Eighth Plan priod. During th Ninth Plan, thr of th fiv yars witnssd poor prformanc as a rsult of wathr - rlatd problms. In addition, a slow down in th world conomy also affctd th lvl of xports. This problm, coupld with lowr than xpctd public invstmnt as wll as th rlativly poor prformanc in th agricultur sctor, ld to a rducd dmand for industrial goods and consqunt rduction in th growth rat ' 4 * & 1

11 Rol of Planning Commission and NDC in Policy Formulation 101 I Tabl 7.1: Growth Pqformancs in th Fiv-Yar Plans in India (pr cnt pr annum) i Plan ~riid First Plan ( ) Scond Plan ( ) Third Plan (1 96 1: - 66) Fourth Plan ( ) 1 Fifth Plan ( ) Sixth Plan ( ) Svnth Plan ( ) Eighth Plan ( ) Ninth Plan ( ) Tnth Plan ( ) So~irc: Planning Commission, Govrnmnt of India Not: 'Th growth targts wr st for th first thr plans ( ) with rspct to national incom. Howvr, in th Fourth Plan th targt was st with rspct to nt domstic product. ~hraft1;'in all Plans ( ) it has bn gross domstic product at factor cost. in th industrial sctor. Disastrs lik th Supr-Cyclon in Orissa, Earthquak in Gujarat, and Kargil war, rsultd in divrsion of rsourcs from invstmnt and consqunt dclin in th growth rat's. This st back suffrd during th Ninth Plan priod was addrssd right at th outst, that is, in th Tnth Fiv-Yar Plan. Thrfor in a robust d~nonstration of its nascnt strngths, th conomy aftr growing at 8.5 pr cnt and 7.5 pr cnt in th two prvious yars ( ), is projctd to grow at 8.1 pr cnt in th yar Th growth of G ~ at P constant prics in xcss of 8.0 pr cknt has bn achivd by th conomy in only fiv yars sinc India's indpndnc. Thus, th data rgarding growth prformanc in th succssiv Fiv-Yar Plans rflcts that th track rcord of planning in India is rasonably good, which indd tnds to rr on - - th sid of caution. In addition, this vidnc also suggsts that thr has bn a stady jmprov~nnt in th growth potntial of Indian conomy. Ovr th yars, th Indian planning systm has movd f m a highly cntralisd invstmnt planning modl to that of a dirctional mthodology. Th Planning Com~nission concrns itslf with volving a long-trm stratgic vision of th Indian conomy, dcids on prioritis and works out th sctoral targts consistnt with th stratgic vision and prioritis, Th formulation of sctosal policis, programms, and projcts ar mainly th rsponsibility of th concrnd ministris and attachd offics of th govrnmnt. Howvr, th Planning Commission plays an important rol in indicating th initiativs that govrnmnt nds to tak both in trms of invstmnts and policy changs to ralis its objctivs.. I-... Its intgrativ rol in th dvlopmnt of a holistic approach to policy fornulation in critical aras, whr both th Union and th stats hav a rol to play, is worth mntioning. In a fdral framwork, an intgratd approach can b dvlopdby th Planning Commission by maintaining clos links and continuous intraction with both th cntral ministris and stat govrnmnts. This approach has bn hlpful in th bst possibl utilisation of th scarc rsourc.s. Th rol of th Planning ~o~nrnission in invstrnntplanning, spcially in maximising th output of th conomy and avoiding ) wastag of rsourcs and output is also apprciatd. Bsids nsuring th fficint utilisatioi~ of I

12 102 Public Policy and Analysis rsourcs, th Planning Commission has bn attmpting to upgrad th capability of th implmnting agncis by dissminating infoimation on bttr dlivry mchanisms and bst practics. Critiqu of th Rol of th Planning Commission Th rol of th Planning Cominission has com undr criticism from many quartrs. First and formost is th on rlating to its rol as an xtra-tonstitutional body. It is argud that whil th Constitution armarks sphrs of authority and rsponsibility ovr spcific subjcts and aras of activity in a fdral st up btwn th Union and th stats, th Planning Commission, which has com into xistnc by an xcutiv ordr of th Union govrnmnt, acts as a ' supr-cabint' in conomic mattrs for th Union and th stats. Morovr, its practic of discrtionary grants and crdit, with laborat schms of matching ratios for outlays, undoubtdly infrings th fdral charactr of th Indian polity. Whn diffrnt political partis ar at th hlm at th cntr and in som stats, this aspct has assumd significanc and bcom a major political issu for controvrsis and political accusations svral occasions, Chif Ministrs of som stats hav accusd th Planning Commission that it has bcom anothr buraucratic hurdl in th initiation of dvlopmnt schms. Thr is also. an opinion that th authority and powr in th Planning Commission has shiftd from th xprt groups to civil srvic prsonnl. In practic, barring a handful of prsons drawn from acadmia or scintific institutions, civil srvants on dputation'to th Planning Commission, hav managd to occupy ky posi tions as advisors and plannrs, rpla~ingxp~ts. Th Scrtary of th Cdmmission has bcom th nodal point in plan fomulation, thrby flushing out th xprts. Th most dominant styl of policy-making is that of appointing committs or cormnissions for dirction on important mattrs. Th intr-linkags btwn sctors and among ministris ar oftn achivd through th appointmnt of ths slctd bodis, which arguably mak th procss mor protractdltirn-consuming, instad of contributing in any fruitful way to policy formulation. * With th rsult, th fiv-yar plans ar sldom prpard on tim. For xampl, th ~ i~hih Plan's approach papr was rady only aftr compltion of almost on yar of th plan-priod. Th Planning Commission is also subjctd to th criticism that vn during plan formulation th Coinmission is guidd mor by political prssurs or xpdincy than by its xprt judgmnt. Th annual planning in th sns of an ovrall, colordinatd and dirctdmulti-instrumnt govrnmntal initiativ is oftn absnt. Th actual prodss ofplan fomulation has lost its maning and has bcom mrly a ritualistic and cumbrsom xrcis. It is, somtims,also argud that th Planning Com~nission inffctiv, as it has littl powr in th procss of implmntation of th plans. Last but not th last, som critics ask that wh~hould w hav a Planning Commission? Tl-r mmbrs drawn from among th bst talnt availabl in thir ara of xprtis sm to, hav vry,littl say in th final outcom of th plan. It has a sparat division to dal with agricultur, and othr divisions to dal with ducation, halth, tc. "Th prspctiv is as fragmntd as it is in th oprating wing of th govrnmnt" (Ishwar Dayal, 1996). Th Dpartmnt of Economic Affairs in th Ministry of Financ is considrd adquat to dcid upon macro-conomic prioritis and policis. Similarly, th othr ministris can dcid on sctoral mattrs. In this contxt, th structur of th Commission and th dynamics of how it functions oftn oblitrat dcisiv contribution by th mmbrs. Morovr, th Planning Commission dvlopd a sgmntd structur and has bcom a shadow organisation of th ministris of th govrnmnt. Howvr, diamtrically opposit viws hav also bn xprssd in this rgard: th Planning Commission, though an advisory body, is consultd by th cntral ministris rgarding all th important issus. It provids xprt advic and nsurs that th dcisions takn ar in conformity with th stratgy and policis indicatd in th plan.inpractic, th Commission conducts valuation '

13 Rol of Planning Cornnzission and NDC in Policy For~nulation 103 r) of th projcts/schms, whicfi gnrats data for ffctiv dvlopmnt planning. Thir rsults provih valuabl guidanc in making mid-cours col-sctions, if ncssa~y in th implmntation of programms. Th Planning Commission, thrfor, has som control ovr plan impllnntation through th mchanisms of annual plans, projct appraisal's, policy valuation, tc. Hnc, nithr it is an inffctiv ornamntal body nor a supr-cabint, but can b considrd as a co-ordinatos in th procss of volving a framwork for govrnmntal schms and projcts for dvlopmnt. In th procss of policy formulation, it has to mak colnpromiss and giv wight to political considrations in addition to its own framwork. Howvr, w hav sn that th procss of plan formulation is a lngthy on and dpndnt on th dvlopmnt prspctiv of th political ladrs. Thr is a nd to bring significant changs in th planning procdur to maintain its rlvanc. Th Planning Commission has also bn laying mphasis on th nd for improving th planning procss and capabilitis in th stats, which bar th primary rsponsibility for craling and maintaining nos1 or th socio- conolnic infrastructur in th country. In opr mixdconomy, rol ofth govlnmnt involvs markt rgulation and public sctor initiativs. similarly, th Planning Commission in India is aproduct of th mixd conomy logic. As long as India's commitmnt to a mixd cono1ny continus, th Planning Commission will rmain rlvant for poljcy formulation. Howvl; crtain constraints mrging from th currnt trnd towards globalisation, libralisation and privatisation, would forc a rorintation in th rol of th Planning Commission. It has to adopt mor of markt-frindly approachs and b snsitiv to global trnds on movmnt of capital, tchnologis, srvics and goods. Th protctionist policis of thpr-wto (World Trad Organization) rgim ar no longr rlvant to an conomic contxt dominatd by no-libral conoinic paradigm and th forcs of globalisation. Pric fluctuations in th global markt for itms, such as, crud oil, mtals, food products, tc. hav an i~nmdiat and oftn an advrs impact on th conomy of India. Again, outsourcing of srvics by advancd wstrn countris - ntirly in th privat sctor offrs favourabl trnds for th Indian conomy. In many sptzrs, spcially in attracting forign invstmnts, ti stat govrnmnts hav bn pro-activ. Th changing global conomic scnario prsnts challngs as wll, as opportunitis to th Planning Colnmjssion. On should not that th contxt is opn to many ky playrs to tc& initiativs in viw of th nd. for quick rsponss. Ths ky playrs w widly sprad, among th political lits at th cntral and stat lvls, public and privat sctor xcutivs, multi-national corporations and so on. Instad of adhring to notions of cntrdisd dcision-making and pr-fixd plans, th Planning Commission has to assum a mor dynamic rol as a watch dog of th conomy, as a facilitator, and as a think 5 tank. A r-orintation in its rol rq~lirs gratr inputs from xprts in th fild of conornics, scinc, information tchnology, patnting, tc. CONCLUSION d f To conclud, it can b statd that th Planning Commission has to analys th conomic, financial, social, and political situation; diagnos rasons for succss and failuls in prformanc; and valuat capabilitis to xcut and rcommnd improvmnts. On important componnt of th Commission's task is policy formulation. It appoints a larg numbr of tchnical, sctoral and spcial committs; thrby involving political Iad'rs, adminivtraiors, xprts and mmbrs of non-govrnmntal organisations in foymulating national cono&c policis. Finally, th Planning Commission formulats th fiv-yar plans, which lay down th national goals to b achivd and th stratgy to b followd.

14 1 04 Public Policy and Analysis This Unil has hlpdus to undrstand th rol of th Planning Commission in dtail. W hav cliscussd th structur of th Planning Commission and its rol in th planning procss as an indpndnt body. W hav xamind th rol and composition of th NDC in dtail. This Unit has highlightd th importanc of abov bodis dspit th fact that thy ar non-statutory advisory bodis. Th Planning Commission also has som control ovr- plan implmntation. In addition, th procss of plan formulation and th mannr in which diffrnt units of th Indian fdration and thir agncis intract in th planningprocss hav bn dscribd. Lastly, th Unit has dalt with various criticisms and controvrsis in th contxt of th rol and powr of th Planning Commission and highlightd th nd for a rorintation in its rol in thcontxt of libralisation, privatisation and globalisation. 7-8 KEY CONCEPTS Macro-Economic Policy : This Policy is rlatd to th national conomic systm as a whol. Prspctiv Planning : It is a long-trm ovrall planning taking into viw all aspcts of th conomy and th intr-sctoral rlationships. Projct Appraisal : Evaluation of aprojct to stimat its achivmnts as against th stablishd goals, stimatd cost, tim and rsourcs. 7,9 REFERENCES AND FURTI3CER READING Dayal, Ishwar, "Organization for policy Formulation", Kuldp Mathur, (Ed.) 1996, Dvlopmnt Policy andadrninistration, Sag Publications, Nw DIhi. Govrnmnt of India, Cabint Scrtariat (Dpartmnt of Cabint Affairs), Rsolution (National Dvloprnrzt Couizcil), 71h Octobr Govrn~nnt of India, Ministry of Financ, Econornic Division, Econonzic Suwy Govrnmnt of India, Planning Commission, Induction Matrial 2003, Nots on th functioning of various Divisions. Govrnmnt of India, Planning Commnission,Annual Rports artd , Nw Dlhi. Govrnmnt of India, planning Commission, Mid-Tm~ Appraiml of Tnth Fiv-Yar Plan ( ), Rport of 51 " Mting of National Dvlopmnt Council Jun, Kabra, Karnal Nayan, 1997, Dvlopm~zt Planning in India, Exploring an Altrnativ Approach, Sag Publications, Nw Dlhi. Mhta, Asha Kapur, 2004, Multidimnsional ovrt^ in India: District Lvl Estimats, CPRC- CIPA Working Papr 9, IIPA, Nw Dlhi. Nandini, Durgsh, Rlationshiy btwn Political Ladrs arzdacerninistrators, Uppal Publishing Hous, Nw Dlhi. Paranjap, H.K., 1 964, Th Planning Commission: A Dscriptiv Account, Indian Institut of Public Administration, Nw Dlhi. Pmsad, Kamta (Ed.), 1984, Planning and Its Implmntation, Indian Institut of Public Administfition, Nw Dlhi. Wbsit: htt~~://

15 Rol of Planning Cornrnission and NDC in Policy Formulation I ) - - Why should w hav a Planning Commission? Support your wgu~nnts with currnt xampls? 2) Dscrib th composition and rol of th Natibnal Dvlopmnt Council. 3) Obsrv and analys th procss of plan formulation in India and mak suggstions for r-orintation of th policy-makrs. 4) Discuss th viw that th Planning Commission is a isupr-cabint' for th Union and stats.