Discuss in detail the main issues of development planning in mixed economy like India. (UPSC CSE Mains 2020 - Sociology, Paper 2)
Limitations of development planning process in India
The planning process in India had become erratic due to several reasons such as:
- It was focused on theoretical tools such as sophisticated mathematical models. These models did not work on the ground many a time because they were based on input/output coefficients that are highly aggregative. This was mainly due to data problems.
- Planning documents generally resulted induplication of the jobs of central ministries and the states by setting up parallel divisions in the planning commission itself.
- During the successive plan periods, the targeted goals were compromised in the most arbitrary way. This was mainly because of the faulty budgeting resulting in absence of annualized break-up of targets set in the plan.
- The multi-year budgeting in our country has its own problems. The rationale behind multi-year budgeting is that different programs have different time spans. For example, Bharat Nirman was launched for a four-year period 2005-09, while JNNURM was launched for seven years beginning in 2006. However, five years is too long a period and almost every plan immediately started dwindling after its launch. It could be more logical if a plan could be prepared for 3 years timeframe and the fourth and fifth years would be set as tentative plans. Further, the five-year plans were not in sync with the annual budgeting exercise. In the absence of a budget system that helps a five-year plan get implemented annually, the five-year planning remained at best as an academic exercise.
- The plan/non-plan distinction in government expenditures had lost its relevance and needed to be abolished.
- Dwindling flow of central assistance for state plans and the cessation of on-lending to the states by the center, the system of Annual Plan approval with the states had lost its significance and needs to be done away with.
- The system of transfers from the center needed to be reformed.
- Successive governments had used the planning commission as a parking lot for decent placement for the favorable officers and academics, who could not be accommodated anywhere else as its members. Its credibility was lost due to its theoretical reports and data mining which generally did not stand correctly on the ground.
- In the words of finance minister Arun Jaitley, the Planning Commission was useful in a command economy structure, which is not relevant today. India is a diversified country and its states are in various phases of economic development along with their own strengths and weaknesses. The planning commission used a “one size fits all” approach and imposed policies on states and tied allocation of funds with projects it approved.
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