People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 42

October 21, 2007

The Privatization Of Planning


Prabhat Patnaik


WE observe two simultaneously existing paradoxes these days: first, even as planning, for all practical purposes, is being given a burial at the national level, with the eleventh plan document, whatever its worth, not even ready six months into the plan period, there is much emphasis, at the level of the same central government and the same Planning Commission, on detailed planning at the district level. Secondly, even as there is enormous centralisation of powers and resources away from the state governments and towards the Centre, there is simultaneously much emphasis, again at the level of the same central government and the same Planning Commission, on decentralisation of powers and resources away from the state governments towards the panchayats and urban local bodies. Thus, one paradoxical combination, of “no-planning” with “excessive-planning”, is matched by another paradoxical combination, of “centralization” with “decentralization”.


Before going into explanations let us first establish the existence of these paradoxes. There is little room for planning in an economy pursuing neo-liberal policies. In fact economists committed to neo-liberalism like T N Srinivasan of Yale have been demanding for some time a disbanding of the Planning Commission as an anachronism. Planning becomes meaningful only in an economy where public investment plays a major role; in a private enterprise economy, the government can at best attempt indirectly to influence the magnitude and the distribution of private investment, but it has little control over either, which leaves little scope for State planning. Public investment in India today is a minor component of total investment, and even in areas where public investment is traditionally supposed to play a crucial role, the emphasis now is on Public-Private Partnerships. The private sector in short is being inducted everywhere, including even in higher education, which leaves little scope for planning. Not surprisingly, hardly anyone is much fazed by the fact that the eleventh plan document has not even made an appearance. Those who are, fret only because it is not de rigueur.




And yet the same central government and the same Planning Commission, which have not lost sleep over the absence of a national plan, are hell-bent that there must be elaborate district plans. In fact the Planning Commission has circulated detailed Guidelines for the preparation of district plans, even though it is not the Planning Commission’s business to do so, and even though by doing so it may well be violating the letter and the spirit of the Constitution. While Article 243ZD of the Constitution mandates the formation of a District Planning Committee upon which it enjoins the task of preparing a District Plan, it clearly states that “the Legislature of a State may by law make provision with respect to” the composition and the function of the DPC. In other words, issues relating to the DPC and how it goes about preparing a District Plan are within the jurisdiction of the state legislature and do not concern the central government, of which the Planning Commission is a component part. The Planning Commission therefore may be transgressing Constitutional propriety in issuing Guidelines on district planning. Nonetheless it has done so.


Moreover, the Additional Central Assistance of Rs.25,000 crores for agriculture that was announced at the NDC meet in May requires the formation of District Agricultural Plans, and of a State Agricultural Plan, the latter to the satisfaction not only of the Planning Commission but also of the Union Agriculture Ministry. Agriculture being a state subject under the Constitution, the fact that the State Agricultural Plan has to be cleared by the Central Agriculture Ministry violates the Constitution (even if we ignore clearance by the Planning Commission which has been vetting state plans for long, arguably un-Constitutionally). But what is clear is that while planning at the top is disappearing, planning at the lower level is becoming increasingly rigid and detailed, even when it comes to the agricultural sector, which, even in centrally-planned economies like the Soviet Union, had the just reputation of being notoriously unplannable.




The second paradox is equally striking. The central government which is busy abrogating the powers of the state governments, and which, through innumerable measures, too well-known to need recapitulation, has reduced the state governments to the status of mendicants, apparently loves decentralisation from the state governments to Local Self-Governing Institutions (LSGIs). Even though the latter decentralization according to the Constitution is a matter within the jurisdiction of the state legislatures, the central government has set up a Ministry of Panchayati Raj, which, despite having no Constitutional locus standi in the matter, has gone around calling conferences of state governments, signing MOUs with them, and asking them to pursue specific policies such as rural business hubs with corporate participation. And the Guidelines issued by the Planning Commission on district plans even recommend, without giving any reasons whatsoever, that 40 percent of the Plan Outlays of the state governments must be handed over to the LSGIs.


Now, the most ambitious programme of democratic decentralization to LSGIs undertaken in the country has been in Kerala where, following the People’s Plan Campaign, 30-35 percent of the Plan outlay was handed over to the LSGIs. This figure had a rationale: the areas where the LSGIs were supposed to be active claimed, according to some studies, approximately 30-35 percent of the total plan outlay. After the ninth plan, however, even in Kerala the share of LSGIs has not been maintained at this level but has slipped down to just below 30 percent. The Planning Commission in its own wisdom however has decreed that it must be 40 percent! The “centralization-decentralization” paradox in short boils down to the fact that the state government is being squeezed from both ends at the behest of the Centre, to yield more powers and resources to the Centre on one side and to the LSGIs on the other.


How do we explain these paradoxes? It is quite obvious that the type of detailed plan that is sought to be drawn up at the district level is simply impossible, and even if perchance such a plan is drawn up, it does not have the remotest chance of being ever implemented. Not content with simply a district plan, the Centre has proceeded to demand “watershed planning”, i.e. plans have to be drawn up even transcending district boundaries, for the entire watershed region. The Centre now wants such schemes to be included under the NREGS which give particular attention to watershed planning. And some Centrally Sponsored Schemes even encourage the meticulous planning of what crops are to be grown on particular fields and regions, accompanied by cash “incentives” to peasants for growing such crops. To do so in a situation where the peasants have no assured prices, backed by government procurement operations, and where they are exposed to the fluctuations and the trend decline in world prices for primary commodities, is as puerile as it is dangerous. But can puerility alone suffice as an explanation?




An alternative explanation readily offers itself, namely that both paradoxes are expressions of an attempt to push the country further into the web of neo-liberal policies. Consider the “centralization-decentralization” paradox, whose net effect is to squeeze the powers and resources of the state governments from both ends. Now, the Centre, it is well-known, is committed to neo-liberalism. The Central government is infiltrated by bureaucrats who have migrated from the World Bank and the IMF, the premier imperialist agencies promoting neo-liberalism. The more the state governments become powerless vis a vis the Centre, the easier it is for the latter to impose “conditionalities” on the state governments, forcing them to adopt neo-liberal policies, such as the privatization of PSUs and public utilities; the imposition of “user charges” for public services; the throwing open of scarce natural resources, including land, minerals, and water, to private profiteering; and the curtailment of government expenditure which thereby creates markets for private educational services, private health services, private insurance services, and so on.


Likewise, untrammelled decentralization away from the state government towards the LSGIs makes it easier to thrust neo-liberal policies through another channel. The LSGIs are extraordinarily weak in all states other than the Left-ruled ones. They have little capacity to do meaningful planning or resource management on the scale they are being asked to do. As more resources are put into their hands, and as more planning responsibilities are entrusted to them, they are forced willy-nilly into accepting the services of private consultants for fulfilling these tasks. Indeed the central government openly encourages them to employ such private consultants. Now most of these private consultants are either explicitly World Bank-sponsored or explicitly World Bank-linked. Even those few that may not have any such explicit connections are nonetheless imbued with the neo-liberal outlook. Having such consultants therefore is a way of pushing the neo-liberal agenda at the “grassroots” level.


That also explains the absurd insistence on such detailed lower level planning. It is obvious that very few states will be able to produce such plans. In fact the Left-ruled ones will be the sole exceptions in this respect. Most others therefore will simply engage the services of private consultants to do the job for them. The more difficult the job, the more pressing the need will be for such consultants, and hence the less the actual empowerment of the people at the “grassroots” level.


There may not of course be any “conspiracy” underlying all this. More often the “experts” advising the central government or the Planning Commission on these matters see such consultancy in purely benign terms, or perhaps even as an altruistic measure to put some funds in the way of some fledgling institute or the other. But these fledgling institutes too know by now which side their bread is buttered, and produce projects and proposals that are in keeping with the neo-liberal agenda.


Karl Marx would have loved this dialectics. The insistence on planning, the emphasis on building up detailed plans, in fact ends up producing its very opposite, namely the outsourcing of plan preparation altogether to a private consultant operating in the market! Likewise the insistence on untrammelled decentralisation, which is sought to be justified in the name of “empowering the people”, institutionalising “grassroots” democracy, and carrying out “democratic devolution”, ends up as an exercise in which the people are completely sidelined while private consultants make merry.


But the irony does not end there. The Left-ruled states take democratic decentralisation seriously and were indeed the pioneers of it. The process of preparing district plans there is based on a genuine process of popular consultation which is necessarily long drawn out, time-consuming, and without the gloss imparted by private consultancy. So, while the Left-ruled states will be laboriously preparing their district plans and their district agricultural plans, perhaps even missing deadlines set by the Centre in the process, states which have done no democratic decentralization whatsoever will walk off with the moolah on the basis of glossy plans prepared by private consultants who will have a share of it. They have no cause for worry, since the central government has very thoughtfully made provisions for the consultants in the moolah it hands out.