Planning Commission should go, but its expertise should be used

This piece was published in quartz.com. That heading doesn't capture what I am saying- that it should go forever but giving the link anyway.

 http://qz.com/224804

 So, for the first time since 1950, the country does not have a Planning Commission. The fact that the rooms of Yojana Bhavan, the building that houses this ode to a socialist economy, are still populated does not mean anything.
Technically, the Planning Commission is the deputy secretary and the various members. The denizens of Yojana Bhavan are merely the secretariat to the Commission. Technically, they are all jobless, as of now.
The Narendra Modi government may not have formally rescinded the March 1950 cabinet resolution setting up the Planning Commission, but by not naming a new commission, even a month after taking over, it has indicated that it has little use for the body that dominated the management of the economy for 64 years. Already one of its central functions – Plan allocations in the budget -- is being handled directly by the finance ministry. It was rather ridiculous for one body to sit and determine how much funds ministries and states should get and what they should spend it on.
This rather dismissive approach is not new. It was expressed in far more contemptuous terms by Rajiv Gandhi, who ridiculed the Commission as a bunch of jokers. But he stopped short of dismantling it. None of the post-1991 governments too questioned the Commission’s relevance. The closest anyone came to it was Bharatiya Janata Party (BJP) which, in its manifesto of 1998, said `the Planning Commission will be reformed and reorganized in light of the changing developmental needs of our country’. However, the revamp plan drawn up by Jaswant Singh, the deputy chairman during its 13-month first tenure, only attempted to expand the Commission’s empire. Subsequent BJP manifestos remained silent on this matter.
But the idea that the Commission needs to be recast in a different mould stayed. Singh’s immediate successor, K. C. Pant (in the National Democratic Alliance government of 1999), roped in private consulting firms to suggest what the Commission’s role should be. In the United Progressive Alliance’s (UPA) second stint, Manmohan Singh tasked member Arun Maira to suggest how to overhaul the Planning Commission as a Systems Reform Commission. We never got to know what this meant, though Maira has been vocal in complaining that nothing got done. Nevertheless, the proposed name change itself was a major gain; it showed growing acceptance of the irrelevance of the Planning Commission in a liberalised era.
So, the Modi government’s failure to name a new Commission is welcome. In fact, it is high time the cabinet passes a resolution quashing the 1950 one.
But should all the economist-bureaucrats in Yojana Bhavan be given a golden handshake and the piece of prime real estate be turned into a money-spinning office complex? (Incidentally, this was a suggestion given in the late nineties by a Congress ideologue before he took a  ideological left turn.)
Perhaps not. Over the six decades of economic management, the Planning Commission has built up some expertise and resources which could be put to good use. What could these be? Here are four possibilities:
* It will be silly to assume that economic policy making will be done in a vacuum, without any forecasts and projections on macro-economic indicators. Sure, there’s a chief economic advisor and a planning unit in the finance ministry but that need not preclude an independent think tank kind of body that will monitor economic developments, assess their impact on India and provide intellectual inputs for economic policy. During Pant’s stint as deputy chairman, a Delhi-based consulting firm ACOR had suggested something on these lines, comprised of experts on contractual appointments. It had said this could be called the Planning Commission Policy Research Institute or the Strategy Research Institute of the Planning Commission. The Planning Commission nomenclature will have to be dropped, though.
*  Why not, as former minister, Arun Shourie, suggested in a recent newspaper interview, replace the Planning Commission with a Reforms Commission? There is a slew of second generation reforms that are needed; there could be many more that are not evident right now. A Reforms Commission can suggest how to sequence reforms, how to implement them and also help in the political management of reforms. It could be something similar to the Productivity Commission of Australia which its website describes as the `government's principal advisory body on all aspects of microeconomic reform’. Its recommendations, which cover both private and public sector, are based on extensive research and public enquiries.
* Another option could be to have something like the Congressional Budget Office of the United States. The CBO, though it is part of the Congress system, provides independent assessment and analyses of the economic and other costs of every legislation. Its recommendations are taken with utmost seriousness. This is something that is completely missing in India. There is hardly any impact analysis of laws and the result is that the government is ill-prepared for the costs – economic and non-economic - that surface at the time of implementation. India sorely needs a  body that assesses the impact of our multiple regulations and laws both before they are passed and periodically when they are implemented.
* We have seen enough examples of inter-ministerial wrangles making for messy policy, policy paralysis and implementation problems. The Prime Minister’s Office is supposed to sort these issues out but sometimes it may need some expert inputs to work out a compromise. For years, the Planning Commission has played a coordinating role between ministries as well as between the Centre and the states. Why not institutionalise this in a new organization?
A body that replaces the Planning Commission can do any one of these or a combination of these. The basic idea should be that the idea of central planning is anachronistic and contradicts the spirit of a liberal economic order. It’s time to make a clean break from the past.

Modi’s government may be small; the state continues to be big

Narendra Modi’s 45-ministry government has attracted a lot of attention. It is also being hailed as the first step in what could be his signature style of governance – minimum government, maximum governance.
Sorry, but it isn’t.
Modi’s government is certainly a lean government, but it isn’t a minimum government. Let’s not confuse the two concepts. A lean government is about size and numbers. A minimal government is about a philosophy, a certain view of the role of the state.
A minimal state, as defined in the classical liberalism lexicon, is about the state confining itself to just a few areas. There is consensus on two – defence of external boundaries and enforcing law and order as well as upholding the rule of law. There are departures from this point on details. Some liberal streams include the provision of public goods as a responsibility of the state and there are differences on the definition of public goods as well. But the broad point is this: the state should not get into too many areas and most definitely not in areas where people are able to manage their own affairs through their own individual enterprise.  
India is not familiar with the idea of a minimal government. Before 1947, it was used to a colonial-feudal set up and post 1947 that got converted into a mai-baap sarkar. The state kept assuming more and more responsibilities till it was present in practically every aspect of the lives of individual and enterprises, riding roughshod over personal and economic freedoms. And yet the size of the government remained relatively small. Indira Gandhi, remember, ran lean governments. The unwieldy size of ministries is a post-seventies phenomenon. Remember also that gargantuan cabinets continued even after 1991 even as the command-and-control economy structure got steadily dismantled. 
It was only the Swatantra Party that came close to articulating the idea of a minimal state. The second of the 21 principles of the party stated: `. . . The party stands for the principle of maximum freedom for the individual and minimum interference by the state consistent with the obligation to prevent and punish anti-social activities, to protect the weaker elements of society and to create the conditions in which individual initiative will thrive and be fruitful. . .’ It is unfortunate that the party did not get much traction.
Modi’s government doesn’t quite pass this test.
It will if his government decides that the state should not be running hotels, airlines and providing telecom services and gets rid of the public sector in these areas. Instead, Modi talks about strengthening public sector undertakings. It is not clear if the government will pursue an aggressive disinvestment agenda.
It will pass with flying colours if the information and broadcasting ministry, steel ministry, culture ministry and the Planning Commission were disbanded. These are clearly, clearly relics of the socialist era. There are a host of other ministries that could make it to the axing list, but changing their role instead into a more of facilitating/regulatory role can be a subject of debate. Closing down these four is a complete no-brainer; no debate is needed.
There are some who argue that since the increase in the role of the state led to the unwieldy size of the government, limiting the size of the government will automatically result in a reduced role for the state, since administration will be a challenge otherwise. This argument is flawed. One, as already noted, Indira Gandhi ran a tight ship but one which was omnipresent and omniscient. Two, reducing the number of ministries and departments will not lead to shedding of work. On the other hand, technology can make it easier for the state to have its tentacles everywhere – far, far more easier than in the seventies.
Though Modi’s minimum government maximum governance idea does talk about the government moving from an interventionist to a facilitating role, the focus is more about using technology to speed up processes, clearances and permissions and make them transparent. It does not question the need for the myriad procedures that any interface with the government involves. It does not question the number of points of interface with the government. It is about making the government efficient in its current role, not about questioning its role.
Maybe that will come. Maybe Modi will realise that the problem with governance in India is that the state/government has taken on far more responsibilities beyond what should be its core responsibility of defence, law and order, upholding the rule of law and provision of public goods. Maybe he will realise the need for the state to focus on just these and do its job well.
Modi must be persuaded into making the 45-ministry government the first step of an ideological leap of faith. A small government must also mean a small, but effective, state.

Rape Reparation

Today's Indian Express has a news item about the Planning Commission proposing a financial assistance scheme for rape victims. Apparently, rape victims will get up to Rs 3 lakh as compensation (apart from official assistance) to tide over the victim's immediate and long-term needs. This, the news item says, is part of an effort to ensure "restorative justice".
Restorative justice is a legal principle (am linking it to the wikipedia definition) and I still have to understand the complexity of it. Maybe the Planning Commission has a point. But I have my extremely cynical doubts about this proposal. 

Apparently, in a note to the Women and Child Development ministry, the Commission has said that apart from punishing the perpetrators the woman's dignity and self-confidence must be restored as well.
But is a sum of Rs 3 lakh (or any financial amount) going to do that? A woman's body and spirit have been violated. What she needs is justice and a few lakhs in her bank account is not necessarily going to get her that. Of course, this does not absolve the state from ensuring speedy justice for victims.
I would rather the state spends money in setting up fast track courts for rape cases and sensitising the police and the courts about the trauma of a rape victim and to deal with them with sympathy and sensitivity. Most rape victims baulk from going to the police or to the courts because of the crude questioning they are put through.
I am also worried that this could lead to other problems. To apply for this compensation, victims have to first file a first information report (FIR). Now, we all know how difficult it is to get an FIR filed and a copy obtained even for ordinary crimes, never mind what the police keep telling us. It is even more difficult in the case of rape. Now imagine a situation where a rape victim seeks a copy of the FIR in order to apply for this compensation. Once the cops know that a couple of lakhs at least are involved, are they going to make it easier for the victims to get the FIR? Won't this involve more harassment?
I also fear a rise in false allegations of rape in order to claim compensation. Many will be shocked that such scepticism is being voiced by a woman. But, let's face it, women are prone to misuse laws meant to help them. It won't hurt us to admit that.
I am not sure if in cases where compensation is being sought, the offender has to be identified, but in many cases, the victim does not know who it is. Whether it was the Maulana Azad Medical College student rape case or that of the girl working at a call centre who was abducted from Satya Niketan, neither knew who their rapists were. The police rounded up bad characters in a particular area and zeroed in on them and they confessed. 
This increases the possibility of misuse of this provision. The proposal mentions the setting up of a District Criminal Injuries Relief and Rehabilitation Board (see the story for details), but I am not sure how effective this will be, either in providing justice and compensation to victims or in preventing rape compensation scams.