Rajiv Gandhi called them a “bunch of jokers.” His widow obviously does not quite agree. The head of the United Progressive Alliance has not only retained the Planning Commission (the object of her late spouse’s uncharitable remarks) but also created one more – the privately-held National Advisory Council (NAC) that works directly under Sonia Gandhi.
The problem is that one “bunch of jokers” does not agree with the other bunch – which is why we saw the spat between the NAC’s Aruna Roy and the Planning Commission, headed by Deputy Chairman Montek Singh Ahluwalia, over where to draw the poverty line.
Planning Commission: Outlived its use and its sell-by date. Reuters
On Monday, Ahluwalia signed his surrender papers when he announced, along with Rural Development Minister Jairam Ramesh, that the Planning Commission’s poverty line figure (Rs 32 per person per day for urban areas and Rs 26 for rural) would be junked for all practical purposes. Instead, there would be a new nomenclature – “priority category” – to identify the poor for coverage under the Food Security Bill.
So Roy wins and Montek loses. But questions and contradictions come to fore from the latter’s capitulation.
First, what is the purpose of having two think-tanks in government – one reporting to the Prime Minister, and another to Sonia Gandhi? Given the power equation between Manmohan Singh and Sonia Gandhi, at least one is superfluous – and we know which one.
Second, even otherwise, the Planning Commission is totally unnecessary in an economy that is largely driven by market forces. The three major jobs done by the Commission currently are preparing five-year plans, discussing state plan allocations with chief ministers, and coming up with the odd draft policy proposals here and there. The first one is a once-in-five-years job, the second is redundant, and the third can be sub-contracted to any think-tank in Delhi or elsewhere for a small fee.
Third, the two organisations have different rationales and relevance. The Planning Commission has no relevance but is statutorily legitimate; the NAC is relevant – it is working on all the critical pieces of UPA social legislation – but not so legitimate, as it is a private cabal with no parliamentary oversight.
Fourth, with budgetary outlays of Rs 93 crore for the Planning Commission and Rs 3.77 crore for NAC in 2011-12, it’s clear which one delivers more bang for the buck. However, here’s the funny part: while the Planning Commission is funded by the general budget, the NAC is bankrolled by the PMO’s funds – but is not accountable to him. Time to end this anomaly.
Efforts to whittle down the Planning Commission are already underway, with the high-level committee on efficient management of public expenditure, headed by C Rangarajan, Chairman of the PM’s Economic Advisory Council Chairman, recommending that budgets should no longer classify outlays under sub-heads called “plan” and “non-plan”.
The committee said in its report released last month that the “age-old distinction between plan and non-plan expenditure” should be abolished and the job of sanctioning state outlays should be done by the finance ministry itself.
According to Rangarajan, quoted in The Asian Age, “This will facilitate linking expenditure to outcomes and better public expenditure” – a job which is better done by the chief custodian of the government’s finances, the finance ministry. This idea is sound for it empowers the distributor of funds (the finance ministry) to discipline spending.
Like the Planning Commission itself, the current classification of expenditure as plan and non-plan is a bit of a joke. We can have a situation where capital expenditure (building schools, for example) is called a “plan” expenditure” but the outlays needed to run those assets (teachers, etc) are called “non-plan”. This is why we often have schools without teachers.
Rangarajan illustrated this anachronism in a recent BusinessLine interview: “You can get a situation whereby…you may build more hospitals and schools but because teachers and doctors are treated as non-plan expenditure, and if that (outlay) does not increase adequately, you can end up with schools without teachers and hospitals without doctors. Our recommendations seek to solve this problem.”
The upshot: if there’s no plan and non-plan classification, and if there is no need for an intermediary between the centre and states on clearing outlays, there is no need for a Planning Commission.
The last remaining job – drawing up five-year plans – can be assigned to temporary commissions like the Finance Commission and the Pay Commission, which are constituted for a specific purpose and then disbanded once their job is done.
Montek’s job will, at best, remain a sinecure – assuming he still wants it. He is probably sticking around only because he does not want to let down the PM – who is a close colleague and friend.
Maybe, it’s time for the PM and Sonia Gandhi to put him out of misery and wind up the Planning Commission.
