Make planning fashionable again (Indian State must return to decision-making)

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Make planning fashionable again (Indian State must return to decision-making)

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• Central Planning in India: Nehru chose the road of central planning in 1950s, and went for industrialisation by setting up PSUs in diverse areas, building up institutions in space research and atomic energy, and various centres of higher learning. India was very poor at that time.
• Challenging economic orthodoxy: David Ricardo's theory says countries must focus only on their comparative advantage. But India entered into new domains – nuclear research and machine building, challenging all notions! Ricardo would have wanted India to focus on labour-intensive ones only.
• Colonial times: The British Raj systematically killed Indian entrepreneurship, and Nehru saw it well. His policies in 1950s reflected that need. India became a model for other Third World nations.
• Planning years as the foundation: So, India's vast and diversified economic base was built during the planning years. But it could not help agriculture or SSIs much. Nor did it bring in land reforms or good primary education.
• The 1990s: Indian commitment towards "development through planning" reduced in the 1990s, and Planning Commission was disbanded in 2014. The LPG reforms of 1991 saw a decline in investments in agri and industry.
• What are PSUs now? They are only seen as commercial entities that bring in returns, but not as original technology creators. The private sector may be uninterested in many domains where PSUs can do well.
• State's withdrawal from economic decision-making: Today, India is a huge market for goods exported from across the world - cars, mobiles, food stuffs. But our manufacturing is extremely poor, despite large labour reserves being available.
• Importers: We are giant importers of machinery and electronics, even after the arrival of "Make in India" programme.
• Planning and globalisation can be compatible: A developing nation like India facing the turbulence of globalisation needs more, not less, central planning. China's example, where the State largely controlled the whole process of planning even in high-tech areas, is not irrelevant.
• Largest employment problem in the world: More than 1.5 crore await jobs each year, making it the largest problem globally. Foreign firms cannot solve it, as their tech is labour-saving. We need new solutions that absorb our labour.
• Solution: Have a central planning model that brings research institutions and PSUs together, to spread technologies to rural entrepreneurs, to enable jobs creation. Areas like electric vehicles, biotech in agriculture and renewable energy are waiting to happen in a big way.
• Summary - India now needs central economic planning once more, if its youth is to truly find employment on the scale desired.

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