Economic Planning in India: Evolution, Challenges, and Transformative Initiatives

To prepare for INDIAN ECONOMY for any competitive exam, aspirants have to know about Economic Planning. It gives an idea of all the important topics for the IAS Exam and the Economy syllabus (GS-II). Important Economic Planning terms are important from Economy perspectives in the UPSC exam. IAS aspirants should thoroughly understand their meaning and application, as questions can be asked from this static portion of the IAS Syllabus in both the UPSC Prelims and the UPSC Mains exams.

Planning is the process through which Govt. prepares a list of socio-economic problems e.g. mass poverty, inequality, low productivity in agriculture, lack of industrial and infrastructural development etc.; and then Govt. sets goals/targets/plans to fix these problems. 

Challenges and Shortcomings in Economic Planning: A Critical Analysis of the Planning Commission’s Limitations

• Achieved about 9% GDP growth-rate during 2005-07, thanks to the American boom prior to the Subprime crisis. But almost all nations including Pakistan had experienced high growth in that era. So 9% GDP did not come from the PC’s magic wand.
• Post-Subprime crisis, amid challenges in Economic Planning, GDP-fell while food-inflation &NPA rose during 2008-13. The PC couldn’t fix it.
• The PC was a toothless body, and couldn’t punish any government organizations if targets failed.
• Failed to implement land reforms, labor laws.
• PC designed Government schemes with ‘One Size Fits’ all approach and a few extra crores to NE, J&K, Hill-states and LWE-affected states. But for long, PC did not use pilot projects / sample testing / interaction with states. So, Indira Awas Yojana (IAY), ICDS- child development scheme etc. programs failed to show tangible results despite pumping crores of rupees over the decades.
• PC tried to bypass State Governments by designing schemes that were directly funded to NGO & private agencies. So, non-Congress states became unenthusiastic about implementing Central Schemes.
• Only in 2013, PC attempted to undo its mistakes by reducing the number of Centrally sponsored schemes (CSS), Performance based funding to States etc. But it was too little, too late.
• PC’s shortcomings resulted in creation of new bodies like PM’s Project Monitoring Group, PM’s Economic Advisory Council (PM-EAC), Group of Ministers (GoM) committees This all resulted in more lack of coordination. So, Govt. felt the PC was beyond repair & replaced it with NITI Ayog.

Comparing Functions: Planning Commission vs NITI Aayog in Indian Economic Planning Landscape 

• While the Finance commission (a constitutional body under Art. 280) is responsible for the tax- devolution from Union to states, these two non-constitutional bodies, within the realm of Economic Planning, look/looked after →

Exploring Economic Planning : NITI Aayog’s Transformative Initiatives Shaping India’s Future

It is evident that NITI’s approach is more modernized, forward-looking, less bureaucratic and less status-quo oriented than the erstwhile Planning Commission. With such initiatives, NITI Ayog is playing a pivotal role  in Economic Planning for fostering economic growth, human development and good governance in India. 

Economic Planning Guidance: Exploring the Role and Impact of the Prime Minister’s Economic Advisory Council

• PM-EAC is just like PC and NITI, this is also neither constitutional nor statutory body.
• Started in the 2000s to give advice on economic issues to the Prime Minister within the context of Economic Planning.
• After PM Manmohan Singh’s term finished (2014), PM Modi did not reconstitute it for a while. But in 2017, our growth rate decreased in the aftermath of demonetisation and GST, so opposition parties & critics were making a lot of hue and cry about the PM’s faulty economic policies. In that atmosphere, PM Modi again reconstituted this Economic Advisory Council (2017-Sept).
• Composition: Economist Bibek Debroy (as Chairman) & other notable full time and part time members, Total 7 persons.
• NITI provides administrative and secretarial support to PM- EAC. PMEAC has suggested to government to:

1. Set up a GST Council like body on public expenditure
2. Reduce the number of GST slabs.
3. Reduce the Direct Taxes to boost the demand & economy.

 PRAGATI: Catalyst for Economic Planning Excellence in India

• 2015: Pro-Active Governance and Timely Implementation (PRAGATI) is a web platform under Prime Minister’s Office (PMO) for Monitoring scheme implementations.
• Addressing common man’s grievances related to tax refunds, EPFO claims etc., falls within the purview of Economic Planning.
• PM uses this digital platform for monthly video conferencing with ministries & departments in Union, and Chief Secretaries in States.

Economic Planning Hub: Understanding the Role of MoSPI in India’s Policy Landscape

Ministry of Statistics and Programme Implementation (MOSPI)’s administrative head is called ‘Secretary & Chief Statistician of India’ usually, Indian Statistical Service officer recruited by UPSC. MoSPI consists of: 

1. Economic Planning in Action: Understanding How NSO Shapes India’s Data Scene- 

1. Central Statistics Office (CSO): within the spectrum of Economic Planning, handles the computation of GDP, GSDP, IIP, ASI, CPI (Rural, Urban, All India) and Economic Census (6th was done in 2013);
2. National Sample Survey Office (NSSO): data collection for various socio-economic indicators, Annual Survey of Industries (ASI), Rural-urban prices and other data required for CSO’s calculations.
3. 2019-June, MoSPI merged CSO+NSSO henceforth it will be called National Statistical Office (NSO) only. It will be headed by Chief statistician of India-cum-Secretary of MoSPI. (Earlier, C Rangarajan’s National Statistical Commission in 2005 had recommended this CSO+NSSO Merger). Further, MoSPI is also planning to set up a National-Level Data Warehouse: It’ll act as a central repository of all the statistical data collected by various ministries, and provide big data analytics.

2. Economic Planning in Practice: Decoding the Programme Implementation Wing’s Impact- 

1. Member of Parliament Local Area Development Scheme (MPLADS-1993): As part of Economic Planning, each MP can suggest development works worth ₹ 5 crore per year in his constituency.
2. Twenty Point Programme (2006) to measure performance of various schemes related to poverty alleviation, employment generation, housing, education, health, etc.
3. Infrastructure Monitoring and Project Monitoring.

Exploring Economic Planning: The Role of National Statistical Commission in India

• Setup in 2005 in MOSPI by Cabinet resolution based on recommendations of C. Rangarajan Committee. So, neither constitutional or statutory.
• Structure: 1 part time chairman, 4 part time members + NITI Secretary is ex-officio member, 6 people in total. The Chief Statistician of India serves as ‘Secretary’ to this commission.
• Functions: It replaced the erstwhile Governing council of the NSSO. So, basically the nodal body designing the standards of data collection- data publication, coordination among the different agencies involved.

NSC Controversy: Understanding Problems in Economic Planning

In 2019, two members resigned citing “Over the months, we have been feeling that we were not being taken seriously and being side-lined by the government,’ within the context of Economic Planning. NSC has approved the Employment Survey 2017-18 but it’s not yet released.” Critics allege this Employment survey shows jobs fell after demonetization / GST so Modi did not want data released. 

Understanding Economic Planning: Consequences of Manipulating Data and Window-Dressing- 

• International organizations will lose confidence in India’s data collection methodologies  within the framework of Economic Planning. They will not believe fully, even if the Indian economy is really growing.
• Large sized economies have to contribute more money to IMF & in return gets more voting rights in the IMF board (e.g. USA). But, if the IMF loses confidence in our data collection methodologies, they may not increase our quota, even if we become an economic superpower.
• International credit rating agencies such as Standard & Poor’s (S&P), Moody’s, and Fitch Group will give poor ratings to Indian G-Sec and corporate bonds – Foreign investors will feel shy about investing in India or they will demand higher interest rates.

Building Trust in Economic Planning: Government Measures for Official Statistical Data

1. Draft National Statistical Commission (NSC) Bill 2019 to give statutory status to National Statistical Commission, so it may work more independently.
2. Draft new National Policy on Official Statistics.
3. In 2019, within the scope of Economic Planning, MOSPI set up a new SCES Committee.

Understanding Economic Planning: The Impact of the Standing Committee on Economic Statistics (SCES) – 

• Setup in 2019, To improve the quality of data, MoSPI set up a Standing Committee on Economic Statistics (SCES) with 27 members + 1 Chairman (Ex- Chief Statistician Pranab Sen) à total 28 persons.
• This new SCES Committee, within the domain of Economic Planning, subsumes previous 4 Standing Committees on:

1. Labour force statistics,
2. Industrial statistics,
3. Services sector and
4. Unincorporated sector enterprises.

• SCES will review the existing framework/methodology/data collection for IIP, periodic labor force survey, economic census etc.
• Economic Planning Insight: Recommendations by Chairman Pronab Sen – 
• • Within the scope of Economic Planning, the Government should announce a specific calendar that on the ‘x’ date of each month or quarter, ‘y’ Macroeconomic indicator data will be released.
  • This way critiques will have more confidence in the data released by the Government.

Conclusion
Economic planning is crucial for steering a nation towards sustainable growth and development. Effective economic planning involves addressing socio-economic challenges and setting strategic goals. The success of economic planning lies in adaptive strategies and continuous evaluation of initiatives.

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