With Niti Aayog’s three-tier plans, Soviet-era state control over economy is back (in a new bottle)

When Prime Minister Narendra Modi announced the dismantling of the more than six-decades-old Planning Commission in his Independence Day speech on August 15, 2014, it seemed that India was at last formally breaking with the notion of planning, a socialist recipe for the anarchic market economy.

It would have been better had no other institution come up in its place. But plans were afoot to create something to replace the old structure. So, after huddles and deliberation, when the prime minister announced the setting up of the National Institute for Transforming India – with it’s acronym, Niti, dovetailing into the Sanskritised Hindi word for policy in line with the Bharatiya Janata Party’s formal Hindi idiom – it seemed that the new set-up would serve as a think tank of sorts, a talking shop. Unlike the Planning Commission, which was centralised, the Niti Aayog looked to involve the states in an official capacity in its Governing Council. This was a again a reflection of the BJP’s and Modi’s promise of “cooperative federalism”.

Old wine, new bottle

However, after the third meeting the Governing Council of the Aayog on Sunday, it turns out that the commission is the proverbial old wine in a new bottle. Instead of the Planning Commission’s five-year plan, which went through 12 cycles since 1951 (the last one ended March 31) the NITI Aayog has come up with a 15-year perspective plan, a seven-year medium-term plan and a three-year agenda for action.

This seems to be nothing but an improvised version of the old five-year plan, which was too short a period to set an agenda and to achieve the stated goals. The new three-tier planning process gives enough elbow room for long-term goals, medium-term targets and short-term check-lists to be ticked off. But it remains planning as such.

This raises two key questions. First, does India have a full-fledged and mature market economy, where the state does not hand-hold, guide and direct private entrepreneurs? Second, is the BJP, with all its claims to be different from the Congress and ostensibly opposed to its Soviet-inspired socialist ideas, any better if it remains conceptually tied to planning, differing only in the details with Nehruvian orientation?

The second question can be disposed of quite easily compared to the first. The Right-wing, or perhaps more accurately the Right-of-Centre BJP, and the Left-of-Centre Congress, believe in the State as the presiding deity of the country’s economy and do not believe in the individual entrepreneurial energies. It will be pointed out that the Congress’ belief in the state guiding the economy is motivated by the desire to protect the poor from the ruthless competition of the market economy, while the BJP’s aim in doing so is to help the big corporations and to manage economic unrest. but the ultimate goal is to make India a stronger nation-state, and the welfare and happiness of the people is only an incidental.

The arguments can be pressed forward and this could serve as the basis for an important national debate on the raison d’etre of the nation-state. This debate, with all its philosophical underlinings, is essential, and should not be dismissed as being of no value. Indians must discuss, debate, ponder over political ideals and ideas.

Is India a market economy?

But it is the first question that is of greater importance at the moment.

Is India a market economy? It is a legitimate question to ask after more than 25 years of economic liberalisation. Many of us have passionately believed that the nanny state – and planning is a spoon-feeding regime – is a curse and an insult to the dignity of the individual and that it is a negation of fundamental freedoms. Not only is it not the business of the state to be in business, it should also not play the role of the guardian, telling people what their economic strategies and goals should be. All that the state should be doing is to create a rule-based level playing field for all participants, individuals and corporations, by creating a fair-minded regulatory framework.

What India should be in 2022 should not concern the state. It should be left to people to decide what they want to be by that year. The fact that Niti Aayog has come up with the three-tier plan system and Modi is keen that certain goals be achieved by 2022, the 75th year of India’s Independence, is a disturbing signal that the State is not out of the cross-hairs of the people. The BJP wants to be seen as the benefactor of the poor through a slew of welfare measures, but it also wants to prod and push the private sector to fulfil national goals. This is a far cry from a liberalised economy and a liberalised polity, where individuals pursue their own goals and will not be told by the state what anyone should be doing.

It is a fact that the market economy is not as inspiring as it seemed to be in the early 1980s of the
Margaret Thatcher-Ronald Reagan era. The 2008 global financial meltdown has dented the idyll of a free economy, and measures of protectionism are bringing the state back into the economy through a backdoor. The controlled economy is then rearing its ugly head once again. Nationalism and its demonic manifestations is the obverse of nationalist economies.

The fact that the world economy is going through a trough that has lasted a decade should not lead anyone to accept the inevitability that there is no escape from the intrusive state in the economic and social affairs of the people. The market economy has indeed faltered, but it will regain its equilibrium. State intervention to buoy up markets should be remedial, but should not provide a justification for the government to remain an active participant in the economy.

India faces a twin challenges: of achieving a mature market economy and keeping the state on the leash. The ideal of freedom implies a minimal state role in the economy and in society. The BJP and Modi cannot be allowed to take over the reins in these two important spheres where individuals should be the monarch of all they survey.