Throwing the Baby with the Bath Water

By Prof. (Dr.) Satya Narayan Misra*

Prime Minister Narendra Modi during his independence address from the ramparts of the Red Fort on 15th August 2014 declared the demise of the Planning Commission, a 64 years old institution founded on the Command economy model of the Soviet Union. Mr. Arun Jetley described the Planning commission as ‘redundant organisation, relic of the past which is irrelevant in a market driven India.’ While the planning commission had  developed a number of warts & moles, many discerning analysts believed that the Prime Minister had acted in haste and ’thrown  the baby with the bath water’. In a riveting recent book ‘Planning Democracy’, the young  historian Nikhil Manon brings out the fascinating history of planning in the 30s and its blazing heights in the 50s & the salience of democratic planning & institutional & technocratic independence for India.

Harking back to history, he notes how the USSR established Gosplan as the centralised agency to foster rapid industrialization. Grigory Feldmen, an electrical engineer and economist was its prime architect (1928-1932). Interestingly, when economic depression struck the USA in the 1930s it was left to Simon Kuznets to bring out National Statistical Data about the dip in GDP & unemployment. This formed the basis for Franklin D Roosvelt to launch state planning through the New Deal program. The 1930s thus witnessed a coalescence of planning as a public policy, for ideologically different countries. The dawn of independence led to a surge in India’s interest in data. Stimulated by the needs of a planned economy, the 1950s saw a massive expansion in the fledgling state’s data capability. At the centre of this development was PC Mahalnobis, the presiding genius of statics in India and of Indian Statistical Institute, Calcutta, where he was the patriarch. With full political support of Nehru who established the planning commision in 1950, he was the author of the crucial 2nd five year plan (1956-61) which underlined the strategy of vast public sector footprint, import substitution and heavy industrialisation as its grand architecture.

It is to the credit of Mahalnobis that NSSO was created and they conducted the biggest and most comprehensive sample enquiry ever undertaken in any country in the world. The Nobel laureate Angus Deaton writes:  ‘the world’s first system of household surveys applying the principle of random sampling was designed by Prof. Mahalnobis.’ The period after the 2nd world war was a globalised epoch of statistics driven numerical positivism. The faith in data entered the era’s zeitgeist. While Nehru called the 2nd Plan document ‘the horoscope of Mother India’ Prof. BR Senoy dissented as also politician Kripalini who considered it anti Gandhian. The 2nd plan reflected the policy of import substitution and heavy industrialisation by giving low priority to investment in agriculture. This kind of thinking was driven by a seminal paper by Hans Singer   and Raul Prebisch in 1950 who brought out that the terms of the trade in less developing countries declined relative to richer country in view of their higher content of primary goods. Paul Rosentein Rodan in 1943 had also strongly advocated for a Big Push theory which advocated injection of industrial investment beyond a certain threshold to break through a new equilibrium. While the 2nd plan started in full cry in the initial years, it had to be aborted towards the end as India was bleeding out of its foreigh exchange reserves.

While the Planning Commission has become anachronistic in India’s market driven approach, the data capacity and its analysis in 1950 remain relevant as ever. It is due to the information harvested by national sample surveys that we know accurately about the level of poverty and unemployment in the country. Unfortunately over the recent decades India’s statistical infrastructure has suffered decline, due to a combination of neglect and understaffing. Deaton had observed in 2005: Mahalnobis and India led the rest of the world. Most countries envy India and its statistical capability.’

However, good data can be bad politics. When the NSSO brought out that unemployment was at a 45 year high in 2017, the government was not pleased and for the first time the govt tried to scrap the survey as it was on the anvil of facing an election. Thomas Pikketty  in  anguish had  observed ’ We are supposed to live in big data but the Govt of India’ s action looks more like big opacity’.Ironically the policy of self-reliance and protectionism which were the defining features  of Nehruvian economics are back in fashion with Modi’s Atma Nirbhar Bharat  campaign. This is not peculiar to India. From Washington to Beijing, London to France, the governments are falling in love with economic self sufficiency, state intervention and hyper nationalism. It is a part of a backlash against free trade and globalisation which has been further roiled by the pandemic. What distinguishes the present moment in India from Nehruvian times is official anti-intellectualism that manifests in the short shrift being given to professional expertise. The public still yearns for a technocrat who can deliver economic bounty. It was Prof. Mahalnobis who played that   key role in the 1950s, Dr Manmohan Singh in the 90s and to a certain extent it was Raghu Ram Rajan during 2013-16.

India’s experience with economic planning has to be understood from the frame of technocracy and technology on one hand and the political project of democratic planning on the other. By establishing a planned economy, India instituted capability like NS survey, National income accounts, and a Central Statistical body. Mobilising citizens for development needs without totalitarian means was integral to the Nehruvian ideas of a state which chose a neutral path   during the cold war. Planning is a technology exercise in directing the economy as a means for modern state building. By decimating the planning structure, the Modi government has snuffed away a major mechanism that set the template for reviewing state’s progress against various macro and sectoral targets. It has also taken away accountability which is the life breath of liberal democracy. Autonomy of professional bodies in collecting and analysing data is also under threat. The whole edifice of democratic planning is getting obfuscated under the smokescreen of cooperative federalism, pious platitudes & rhetoric. Mahalnobis’s profound legacy lies in ruins.




*The author teaches Constitutional Law and Economics. He can be reached through e-mail at [email protected]


DISCLAIMER: The views expressed in the article are solely those of the author and do not in any way represent the views of Sambad English.

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