Essays

The year 1991 witnessed a change in the economic policy with the introduction of liberalization and decontrols. Industrial Policy Resolution of 1991 threw open several more areas to the private sector. The controls were relaxed and general liberalization of the system was attempted with the general globalization of the economy. Planning Commission is the apex organization responsible for executing several plans of development all over the country.

While the Finance Commissions, the statutory constitutional bodies, have been relegated to the secondary position of distributing revenues of non-plan and non- developmental funds, the Planning Commission, an extra- constitutional agency has assumed a prominent role in the economic development of the country, as most of the development funds are released by it to the State Governments. As per the Constitution, economic and social planning is the concurrent legislative power, but the Planning Commission was set up by the resolution of the Cabinet in 1950, with the Prime Minister as its chairman.

The prime responsibility given to the Planning Commission was effective implementation of Five Year Plans. Also described as the "economic cabinet of the country" by some critics, Planning Commission has assumed a very important place in Indian economy. The process of liberalization aims at reduction of controls and regulations drastically, relaxation of Foreign Exchange and Regulation Act (FERA), freer trade with no trade barriers and free flow of foreign investments. Planning Commission basically has a regulatory function in which the activities and schemes of development are monitored. The process of liberalization of economic system is likely to alter its existing role considerably. In a deregulated economy, the planning assumes the role of virtual indicative planning. Even the planning departments of State governments also undergo considerable change from the traditional role. Indian Plans are already distinct from "regimentation plans" of Soviet Union and were termed as "democratic plans".

During the past over 4 decades of planning the market forces have largely guided the decisions of the planning process. Today, there is recognition that in many areas of activity, development can best be ensured by freeing them from unnecessary controls and regulations. Under the changed and liberalized scenario it is not choice between the market mechanism and planning, but the challenge is to properly dovetail the two in such a manner that they become complementary to each other. As the process of liberalization gains momentum, the role of planning in India is likely undergo further changes. When the planning was conceived in India and the Planning Commission was set up in 1950, the role envisaged for planning was quite comprehensive. During the planning era. Public Sector expanded with a wide-ranging influence on the economic life of the country.

The controls and regulations which were the dire need after independence to protect the domestic infant industries in the country were stretched to such limits that these activities dampened people's initiatives and their sense of responsibility. India claimed that it followed the "democratic planning" witnessed in the erstwhile USSR, but no tendencies of extreme centralization came to be seen in the Indian context As the developmental funds are controlled and regulated by the Com- mission for the Union as well as the States, its importance has grown out of proportion. The priorities of local needs in the far flung areas of the States are also determined in New Delhi. The Public Sector performance has not come up to the mark and the advent to private sector in almost all areas of the economy in a big way has rendered the concept of Public Sector redundant in the modern day context. The role of resource allocation, hitherto considered the most important function of Planning Commission is also required to be re-defined. Thus under the changed circumstances the entire role of Planning Commission is required to be re-defined.

The prevailing multi-agency approach also needs to be amended to provide coordinated policy formulation in an integrated approach. Such an approach can lead to better results at lower costs and lesser loss of time. The local planning agencies at District, Block or even Panchayat level need to be strengthened. These agencies have to play increasingly greater role to ascertain the local developmental needs and to decide about the resource allocation at local level. In addition/ Planning has to assume a different role by promoting the private sector, as against its traditional role of guarding and encouraging the Public Sector. The process of liberalization and decontrols has encouraged a large number of private investors, both domestic, as well as foreign, to invest in the Indian economy on a large scale.

The Government has already carried out disinvestment from the Public Sector Enterprises, which is an .indication of the Government's renewed confidence in the private sector. Under such a situation, the role of Planning Commission has to transform towards broad indicative planning rather than strictly regulatory one. In a developing country like ours, where a large proportion of population lives below the poverty line, social sector is utterly under-developed. Industry is in the process of developing and other facilities require active Government support for development. Thus, Government role in overall planning cannot be overemphasized. Active Government involvement in creating infrastructures like schools, hospitals, institutions of excellence and scientific research is very essential.

The country has to plan and structure the system of education to cultivate necessary caliber, skills and value systems. This effort will have to be substantially supported by the private sector. But the planning process cannot be allowed to be left to the private sector entirely, as our private sector is not yet fully equipped with the tools to handle the entire range of needs of the country particularly of the poorer and weaker sections. Performance of Indian planning has been laudable in the field of poverty alleviation and upliftment of the downtrodden.

In the field of eradication of poverty and upliftment of the poorer sections by ensuring social justice, the planning will have to continue to play a major role. Another area, where planning has <>n important role to play, is the balanced regional development If this objective is left to the market forces, most concentration of new industries will be around the industrially developed areas, and backward and interior areas, poor in infrastructure, will be completely left out Planning process has to ensure the flow of financial resources and investment in the desired pockets by making special provisions for tribal areas, hilly areas and other backward areas. Similarly, the role of the Public Sector in certain areas cannot be undermiried. Despite the need for privatizing some of the public sector enterprises, the public sector has to continue playing a very special role in the field of communication, transport, energy, irrigation and defence production. The areas like environment, forest, civil and police administration, management of rare minerals, land and water resources have to be managed by government agencies and need constant and detailed planning.