SEPT 26, 2004
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Q&A: Montek Singh Ahluwalia
The celebrated Deputy Chairman of the Planning Commission speaks to BT Online on the shape of post-liberalisation planning to come. What prompted his return to India, what exactly is the Commission up to, what panchayats mean to India's future, and yes, the relevance of Planning in the market era.


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Plan Of Action
With Montek Singh Ahluwalia taking charge of the near-defunct Planning Commission, the focus of "reforms with a human face'' has shifted back to the Yojana Bhawan. Can he deliver?

It is ironic that the original team of reformists of 1991-which virtually did away with the licence-permit Raj, opened up the Indian economy and moved it away from its obsession with the public sector-should now seek to resurrect the very institution that epitomised that era: the Planning Commission. It was the quartet of Prime Minister Narasimha Rao, Finance Minister Manmohan Singh, Commerce Minister Palaniappan Chidambaram, and Economic Affairs Secretary in the Finance Ministry, Montek Singh Ahluwalia, that manoeuvred India out of the crisis of 1991 and started the process of liberalisation of the Indian economy.

Today, the original reformers are back (all except Rao). Only, the roles and the script are different. Dr Singh is in the pm's chair, Chidambaram is the Finance Minister and Ahluwalia the Deputy Chairman of the Planning Commission, and their collective brief: to give the reforms a 'human' face. Along with this shift in emphasis has come a drive to make over old institutions-such as the Planning Commission-albeit with an altogether different charter than before.

MONTEK'S A-Team
Change is clearly in the air at the Planning Commission.
PROF. ABHIJIT SEN: Professor of Economics at Jawaharlal Nehru University. Was Chairman, High Level Committee on Long Term Grain Policy and Chairman, Commission for Agricultural Costs and Prices.

DR. BHALCHANDRA MUNGEKAR: An agricultural economist by profession, he is currently the Vice-Chancellor, University of Mumbai. He is also the Founder-President of Dr Ambedkar Institute of Social and Economic Change.

DR. KIRIT S. PARIKH: Founder-Director of Indira Gandhi Institute of Development Research and Editor of the India Development Report, which assesses India's development and policy options.

PROF. V.L. CHOPRA: An agricultural scientist, he is credited with developing high-yielding varieties of mustard seed. He is currently Chancellor of Central Agricultural University, Imphal.

SYEDA SAIYIDAIN HAMEED: An activist and the only woman member of the panel, she was the Founder-Member of the Muslim Women's Forum and is also a Founder-Trustee of the Centre for Dialogue and Reconciliation.

ANWARUL HODA: A former bureaucrat with the Commerce Ministry, he was the Deputy Director-General of WTO from January 1995 to April 1999. Currently, he is Professor at the Indian Council for Research in International Economic Relations (ICRIER).

The Turnaround Man

Ordinarily, reviving an institution such as the Planning Commission would have been the best way to send a chill down the spine of the market. But the markets aren't running scared. It is perhaps because of the knowledge that under Ahluwalia, the Planning Commission will be a different animal altogether.

The reasons for this are quite clear. For, while it was Singh (he was then Secretary, Economic Affairs), who brought Ahluwalia to India in 1979 as an advisor to the Finance Ministry, it fell to Chidambaram to elevate him to the high pedestal he now occupies in this country's economic establishment. It was the Chidambaram-Ahluwalia combine that scripted the blockbuster budget of 1997-98-a landmark event that has remained the envy of all budget-makers since. Accolades apart, Ahluwalia's fortunes had been on an EBB ever since the blame game for Yashwant Sinha's disastrous budget of 1998-99 began. Ahluwalia became the target of the government's critics-both inside the NDA and those out of it. Soon after, he found himself shunted to an almost-defunct Yojana Bhawan. From where he moved on to the IMF as the Director of its Independent Evaluation Office.

Proximity to the powers that be is, however, not the only reason behind Ahluwalia's dramatic comeback. Surjit S. Bhalla, the Managing Director of Oxus Research and Investments, insists that Ahluwalia's return has more to do with the fact that he is simply the best man available for the job. Bhalla should know. He has seen Ahluwalia at work for the last 30 years. Concurs a former colleague in the Planning Commission: "He is one of the finest minds in the country and capable of handling a challenge of precisely this sort because of his superb people skills.''

And challenges there are aplenty. For the 61-year-old economist with a doctorate from Oxford University, the biggest one is the makeover of the five-decade-old Planning Commission-conceived originally as the apex resource-allocating body in a socialistic economy, a task that has since been handed over to market forces-and making it relevant in today's globalised, liberalised world.

INTERVIEW
"I Think That 7 Per Cent Growth Is Possible''
How difficult do you think is turning NCMP into a reality given the pressures of coalition politics?

As far as economic policy is concerned, coalition government or not, it's never easy to strike a balance between the different interests that are involved. It is not one of those black-and-white situations. It's one of those shades-of-grey kinds of situations.

Can't you directly go the panchayats to ensure that funds actually reach the desired people?

I don't think that we can go directly to the states because the districts have their own problems. They don't have their own independent budgetary set-up; the Constitution does not provide a way to give grants directly. So that direct transfer of funds to local bodies has not been established.

How difficult is monitoring the funding?

It is difficult both ways. The Centre doesn't and shouldn't have a huge army of people monitoring projects. What happens is that the state administration issues utilisation certificates. The issue is whether the system is really working. My perception is that it isn't and that is because the system is so complex.

So should panchayats get more powers?

In my view, that is essential. That part is not controversial either. Everybody agrees with that. The question is how to do that within the given constraints.

Is a 7 per cent growth rate possible?

I think that a 7 per cent growth is possible. But that can only happen if many of the constraints currently affecting the economy are done away with. The National Common Minimum Programme says that all constraints on incomes of farmers will be removed. But there are too many constraints that limit the growth of income of farmers-constraints on movements of crops, marketing etc.

When you leave the Planning Commission, what kind of impression would you like to leave behind you?

I would like to be remembered for pushing a set of policies that helped in achieving the growth targets, that helped in bringing service efficiency in the social sector, which is where public money goes, and the person who made private-public partnership feasible.

The Assignment

Ahluwalia's newest assignment has created misgivings in many quarters. Yet for Ahluwalia, the chance to help in the makeover of Yojana Bhawan was "too exciting an offer to let go''. His answer to what the Commission would do in a largely market economy: strategic planning for the long-term, monitoring the use of funds, reconciling the various demands, and creating a synergy among the ministries. These, he points out, are functions that don't fall under the purview of any ministry and need to be performed by a body such as the Planning Commission. As Ahluwalia points out: "You can scrap the Commission, but you still need some agency to carry out these functions.''

More than anything else, what Ahluwalia is preoccupied with these days is prioritising the allocation of Rs 10,000 crore that has been earmarked in the Budget for the various social sector schemes and the mid-term review of the Tenth Five-Year Plan. He sees the 7-8 per cent growth rate as an imperative if the goals mentioned in the United Progressive Alliance government's Common Minimum Programme (CMP) are to be met.

The Road Ahead

While the tasks ahead of the Planning Commission's Deputy Chairman are more or less clearly cut out, how he will go about accomplishing them isn't. He is still grappling with the problem of finding a "proper delivery mechanism'' for funds. The problem is a simple one. While routing funds through state governments has been a recipe for their misuse, the direct transfer of funds to the panchayats-the most effective implementation mechanism-runs into Constitutional hurdles. Says Ahluwalia: "I don't have a solution at the moment, but it is a very important issue." He is clear about one thing, though: if efficiency in the delivery mechanism is to be brought about, there must be a sense of involvement, ownership and accountability at the bottom level.

To achieve the social goals spelt out in the CMP, he is leaving no stones unturned. Apart from his new team (See Montek's A-Team)-each member of which has been assigned a specific area-he has also constituted seven task forces to look into a host of issues. Ahluwalia also plans to seek inputs from outsiders-professionals, industry heads, and NGOs-for the mid-term review: "We take what others feel, and we take what the government thinks, and then we confront these views to find ways to set policies right.''

But can he pull it off? Will he be able to come up with a policy framework that not only works but is also taken seriously by the powers-that-be. After all, in its 54 years of existence, the Commission can hardly claim to have made even half-a-dozen contributions that can be considered seminal. As one critic points out, the Planning Commission, despite being the premier think-tank of the government, has yet to come out with any major alternate plan for poverty removal, developing better delivery systems for the poor, or an alternate plan to create better infrastructure. "Even the idea of the National Highway Development Project came from the Prime Minister's Office and the Kelkar Task Force on Direct and Indirect Taxes emanated from the Finance Ministry." Given this history, the odds would seem stacked against him. Then again, as economist Bhalla points out: "If Montek cannot turn around the Planning Commission, nobody can. Then, it would be time to give it a decent burial.''

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