PM will have to decide whether India will remain a static agrarian rural society or become an industrial urban society
Mukul Sanwal | September 17, 2014
The abolition of the Planning Commission serves as a shock to catalyse real reform. In establishing the functions and composition of the new Think Tank to replace the Planning Commission, the prime minister will have to decide whether India will remain a static agrarian rural society or become an industrial urban society, and cities are at the centre of the fast expanding global economy.
Urbanisation — both as a social phenomenon and a physical transformation of natural resources — is one of the most powerful, irreversible and visible anthropogenic forces on earth; more than half of the world's population lives in urban areas and by 2050 three-fourth of future population growth is likely to be concentrated in cities; nearly half of global GDP growth between 2010 and 2025 is expected to come from 440 cities, most of them in Asia. India is still predominantly rural, and poor, and could well miss this transformation.
India added 2,800 towns in the decade 2001-2011, and the decadal population growth in urban areas was 32 percent, while there was drop on 12 percent in rural areas. Two-thirds of the population is below the age of 35, driving migration of youngsters from rural to urban areas in search of employment with limited industrialisation and urbanisation 90 percent of workers are in the informal sector. Some 150 million 18 to 23-year-old were qualified to vote for the first time in this election, and they voted for ‘ache din’.
Urbanisation is a civilizational, transformation and urban areas account for two-third of GDP in developed countries, with around four-fifth of the population. This shift had taken place in north America and Europe by 1970 and will take place in China by 2025. We should aim to move three-fourth of the population into cities and into the middle class by 2050. The Planning Commission had not even begun a national discussion on this transformation.
Ideas matter; solutions were sought by the Planning Commission expanding central sector schemes, and that in many ways shaped the basic design of our polity. For example, one-third of the cases in courts are traffic challans and the back log in courts is best dealt by transferring them out of the criminal justice system not a plan scheme to expand the number of courts.
On global challenges also there has been a curious lack of analysis with other countries well ahead in questioning old assumptions. For example, city buildings use two-third of the electricity generated, transportation emissions largely from cars in urban areas are projected to increase to half of global emissions by 2050 and energy efficiency is considered to have the greatest potential to reduce emissions of carbon dioxide; urban design will shape these consumption patterns more significantly than eliminating the use of coal in generation of electricity.
A shift to strategic thinking will focus on finding and developing unique opportunities, challenging assumptions, and developing ways of understanding the fundamental drivers of urbanisation, industrialisation and development of a services economy by enabling a creative dialogue among people who can affect the nation’s direction; the central and state governments in the national development council. The States will then target these opportunities; planning confuses real vision with manipulation of numbers.
The statistics department, for example, should be in the cabinet secretariat and its scope expanded to include the data available with the various departments for centralised data analysis, evidence-based policymaking and improved efficiency of government operations, based on open technology standards, with states encouraged to set up similar arrangements. This could be further expanded by opening up survey of India’s digital maps and making government transactions and records digital supporting content for the digital India plan.
Second, the new Think Tank will have to intentionally look at things from different perspectives, resist the current urge to let one decision dictate or forecast future decisions, focus on transformative change and not incremental reform. That needs a clear agenda, including doing away with the artificial distinction between plan and non-plan expenditure and the five year plans for goals and outcomes that than can be monitored by the Comptroller and Auditor General (CAG) and discussed in Parliament.
For example, the rupees two lakh crore annually spent on the 150 odd central schemes should be progressively pruned with the centre focusing on infrastructure - national highways to all block headquarters, high-speed rail to the state capitals and surplus electricity generating capacity. Instead of tied transfers the centre could increase the devolution by the finance commission and fully fund areas such as skill development, reform of electricity distribution, digitisation and urban infrastructure where these funds would leverage additional finance, leaving welfare measures, which are in the form of grants, to the states.
Third, the new body will need a new approach to social change. Currently, we are happy to have unelected judges making social policy as economists in the Planning Commission have pushed a ‘rights’ based approach to development and legislators have failed to give clear legislative guidance on how tasks are to be performed allowing courts to step in. The reaction, for example in the case of the environment, to these lawsuits is retreat into a defensive response. Acting as a catalyst, the new Think Tank’s analytical studies should be discussed in cabinet, Parliament and in the national development council to enable reform.
The Planning Commission was created to meet the demands of a new nation emerging from colonialism but sixty-five years later with half the population still in poverty, planning lost any legitimacy as the commission failed to adapt because of intellectual inertia, and its approach of increase in the scope of government masked decay in its quality.
Comments on the abolition of the Planning Commission have primarily focused on its current functions ignoring the transformational shift in the functions of the central government itself in supporting the shift of rural poor into the middle class in cities, and the opposition will not come from states but from central ministries.