There is a debate on about the Planning Commission’s relevance in the present context of market led economy. Graffiti has often taken a stand that the centrally planned model has not delivered socio-economic gains for the people of India. However, Graffiti has stopped short of criticizing or questioning the relevance of the institution. The institution is relevant in the context of being a mechanism to counter balance the vicissitudes of market led economy. The representatives of the people and the planning commission must form a back bone; in this context the commission should be re-formed to embrace new realities.

This post does not delineate how the planning body should be modelled but attempts to build a scenario where the market forces rather than state institutions influence the economy. With the 2014 elections the NDA was brought to power at the Centre. However, with the near total annihilation of the Congress party, a viable opposition is a pipe dream, not just in context of sheer numbers but the fact that the dynasty led party is in some disarray of its own making. So what does it all build up to. When decisions are taken by states or the Centre, that affect the people, there must be a system of checks and balances.

Such anomaly can be overcome by resolving relevant issues when there is a mechanism that is able to look at the problems in a dispassionate manner. Part XI of the Constitution (concerned with the relations between the Union and States) delineates matters that are state subjects or concurrent or subjects for the Union. However, as D. Shyam Babu has outlined in his article, “Should Planning Commission be closed down?” (Down to earth July 15 2014), it has, “adversely affected both our federal structure and Cabinet system of governance.” There needs to be a mechanism that can work with the states to examine issues concerning not just allocations to the states but to ameliorate problems that may be caused by market forces – the classic dilemma of guns vs butter. Market forces may point to greater allocation for things that are relevant to the few vs allocations towards improving water availability for farming, greater investment in health and education.

Often enough there are such dilemmas and the state governments take decisions based not on relevance but based on extraneous factors. In this context, the political mechanism may tilt in favour of the market – this would have an adverse impact on the people. Resources that bring revenue may ultimately find their way in the hands of the vested interests, this would be especially damaging in the regions where there are mines and other mineral resource concentration together with high levels of poverty and under development. In this scenario a body that monitors and resolves such issues is needed.

Strategies that recognise the new realities (of a market economy), and have an understanding of the issues that the people face: the low levels of social development and the high levels of income disparities, would go a long way in setting a growth trajectory. Rather than fighting “the beast of market led economy” with some dogmatic ideological paradigm – that is only relevant to some esoteric worshippers, we need to prepare the next generation to embrace the “new economy”.  For this newer institutions should be put in place that work for the people.


One thought on “State and economy: India’s dilemma

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